# Petition for Writ of Certiorari — TAM Travel, Inc. v. American Airlines, Inc. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_1760%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 2011 - **Citation:** 562 U.S. 1134 ## Text Supreme Court US. S/ 7 sas No. _ _ MAR 18 2019 OFFICE OF THE CLERK Bn The Supreme Court of the Anited States $$. §@ —__ —__ TAM TRAVEL, INC., ef a/.. Petitioners, is DELTA AIR LINES, INC., et al., Respondents. —— On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Sixth Circuit ee PETITION FOR A WRIT OF CERTIORARI JOSEPH M. ALIOTO, JR. Counsel of Record JOSEPH M. ALIOTO, SR. THOMAS PAUL PIER ALLOTO LAW FIRM 555 California Street Thirty-First Floor San Francisco, California 91104 (415) 434-8900 J Aliotod r@AliotoLaw.com Counsel for Petitioners COCKLE LAW BRIEF PRINTING CO) S00) 225-696 OR CALL COLLECT (4ev) 342-089] QUESTIONS PRESENTED 1. To satisfy the pleading requirements of Bell Atl. Corp. v. Twombly and allege a “plausible” price- fixing conspiracy in violation of Section 1 of the Sher- man Act, must a complaint allege facts that “tend to exclude the possibility that defendants acted inde- pendently”? 2. Ina continuing conspiracy among purchasers to fix artificially low prices for the services they buy, does a conspirator commit an “overt act” each time it purchases the price-fixed service at the artificially low conspiracy rate? i] PARTIES TO THE PROCEEDINGS Petitioners in this Court, plaintiffs-appellants below, are Tam Travel, Inc. d/k’a Tamalpais Travel: Travel Goddess, Inc. d/b/a Uniglobe Happy Travel. MZZO, Inc. d/b/a Beyond Travel; Bonanza World Travel, Inc.; TJ Kap, Inc. d/b/a Master Kilby’s Travel! d/b/a Sportsman’s Travel d/b/a Master Travel; A Team Travel, Inc. d/b/a A Team Travel; A&W Travel, Inc.. Katherine Arcell. an individual; Christine Whalen, an individual; Brenda K. Davis and Associates, Inc. d/b/a All Destinations Travel; Allways Travel, Inc.; Breton Village Travel Services, Inc. d/b/a Eastlake Travel Services; Eastlake Travel Services, Inc.; Village Travel Services, Inc.; Adventure Travel, Inc. d/b/a Carlson Wagonlit Travel; Garavanian Travel, Inc. d/b/a Carl- son Wagonlit Travel; Talson, Inc. d/b/a Carlson Wagonlit Travel d/b/a Travel Agents International: Compass Ltd. d/b/a Ambassador Travel; Deluxe Travel, LLC d/b/a Deluxe Travel Ltd.; Destinations, Inc. d/b/a Destinations, Inc., A Travel Company; Exce! Travel, inc.; ETC Holdings, Ltd. d/b/a Executive Travel Consultants, Ltd.; Rozanne Kunstle, an indi- vidual d/b/a Express Travel; Steven Kunstle, an indi- vidual d/b/a Express Travel; Gidden, Inc. d/b/a Express Travel; Five Star Travel, Inc.; CBD, Inc. d/b/a A Better Way Travel Service d/b/a A Better Way Travel d/b/a A Better Way Travel Service d/b/a Garden of the Gods Travel Service d/b/a Garden of the Gods Travel d/b/a Garden of the Gods Travel Agency: John R. Denny, an individual, d/b/a Garden of the il PARTIES TO THE PROCEEDINGS - Continued Gods Travel, d/b/a Garden of the Gods Travel Service, d/b/a A Better Way Travel, d/b/a A Better Way Travel Service; Y. Jocelyn Gardner, a sole proprietor d/b/a Gateway Travel and Cruises, Inc. d/b/a Gateway Travel Services; Gateway Travel and Cruises, Inc.; Gateway Travel, Inc. d/b/a Gateway Travel and Cruises; Lago Travel, Inc.; Mad Travel, Inc.; Marina Benz, an individual; Camelot Tours, Inc. d/b/a Marina’s Travel; Rosemary D’Augusta, an individual d/b/a Perna Travel Service d/b/a Perna Golf Adven- tures d/b/a Travelbroker.com; Professional-World ‘travel, Inc.; Red Bird Travel Service, Inc. d/b/a Red Bird Travel Plus; Go Everywhere, Inc. d/b/a Riverside Travel Group d/b/a Riverside Travel; Rubinsohn Travel, Inc. d/b/a Rubinsohn Travel Service; Sondra Russell, an individual d/b/a Sandy’s Get Away Travel: Silhouette Travel, Inc.; June Stansbury, an individual d/b/a Stansbury Travel d/b/a Stansbury Sterling Travel; Stansbury Travel, Ltd.; Stansbury Travel, LLC; Nancy Walker and J. Michael Walker, a part- nership d/b/a Sunset Travel; UAT, Inc. d/b/a The Travel Store; Thomas Travel of American Fork, Inc.; Tour West Travel of American Fork, Inc.; LWK Corporation d/b/a Tennessee Valley Travel Agency; Imperial Travel by Dana, LLC d/b/a Universal Travel; Travel by Dana, Inc.; Destinations Resort Reserva- tions, Inc. d/b/a Greenwood Travel; The Travel Cen- ter, Inc.; Carolyn Fjord, an individual d/b/a Travel Express; Travel King, Inc.; Lee Gentry, an individual iV PARTIES TO THE PROCEEDINGS - Continued d/b/a Travel King; Nancy Riesch, an individual d/b/a Travel Plus; Travel Plus, NAR, Inc. d/b/a Travel] Plus; Travel Professionals, Inc.; Travel Travel, Inc. d/b/a Travel Travel Erindale Sq.; WNMP Travel, Inc. d/b/a Uniglobe Professional Travel; Vidal Travel, Inc.; Talgood Enterprises, Inc. d/b/a Talgood Travel; World Traveler, Inc. d/b/a Summerlin Travel d/b/a Carlson Wagonlit Summerlin Travel d/b/a Green Valley Travel d/b/a Carlson Wagonlit Green Valley Travel; World Travelers, Inc. d/b/a Travel, Inc. d/b/a Carlson Wagon- lit Travel/Travel, Inc. d/b/a Summerlin Travel d/b/a Carlson Wagonlit Summerlin Travel d/b/a Green Valley Travel d/b/a Carlson Wagonlit Green Valley Travel; Satellite Travel Systems, Inc. Respondents in this Court, defendants-appellees below, are American Airlines, Inc.; Continental Air- lines, Inc.; and United Air Lines, Inc. The following airlines are not parties here, but were defendants-appellees below: Alaska Air Group, Inc.; Alaska Airlines, Inc.; Horizon Industries, Inc.; America West Airlines, Inc.; ATA Airlines, Inc.; Hawaiian Airlines, Inc.; Air Canada; Delta Air Lines, Inc.; Northwest Airlines, Inc.; KLM Royal Dutch Airlines; US Airways, Inc.; ad US Airways Group, Inc. While the appeal below was pending, defendant- appellees Frontier Airlines, Inc. and ATA Airlines, PARTIES TO THE PROCEEDINGS - Continued Inc. filed petitions for relief under Chapter 11 of the bankruptcy code and this appeal has been held in abeyance as to those airlines only. RULE 29.6 CORPORATE DISCLOSURE STATEMENT Pursuant to Supreme Court Rule 29.6, no peti- tioner has a parent company and no publicly held company owns 10% or more of any petitioner’s stock. vl TABLE OF CONTENTS Page QUESTIONS PRESENTED ..........................20000e0e i PARTIES TO THE PROCEEDINGS ..................... il RULE 29.6 CORPORATE DISCLOSURE STATE- es censhenennsoaeoesens v TABLA OF AUT HORIT ISS .......20.0000.0cccececesccsesceses Vill ee 1 nS A 1 STATUTORY PROVISIONS INVOLVED ............. 1 STATEMENT OF THE CASE......................ccccceeeees 2 SII os ccnsseecocsseceverssresecerooeses 5 B. The Lower Courts’ Rulings....................... a cae REASONS FOR GRANTING THE PETITION..... 18 I. Review Is Warranted To Resolve A Conflict Between The Sixth Circuit’s Decision And Decisions From The Second Circuit And This Court Regarding An Important And Recurring Issue Of Antitrust Conspiracy Eh 18 A. The Sixth Circuit's New Pleading Rule Directly Conflicts With Decisions Of The Second Circuit And This Court, And It Conflicts In Principle With De- cisions From The Third, Ninth, And Cee ia seeeimenanenene 19 B. The Sixth Circuit’s New Pleading Rule Involves An Important Recurring Issue I II iio ccnncscrenieuevesvooessuereseee 27 Vil TABLE OF CONTENTS — Continued Page II. Review Is Independently Warranted To Re- solve A Conflict Created By The Sixth Circuit’s Decision With Decisions Of The Fourth And Eighth Circuits And With Decisions Of This Court Regarding The Proper Pleading Of “Overt Acts” In The Continuing Conspiracy Doctrine................. 30 I il iia ace acccaeiahsaceacesasihndaemsauicasaisaniaes 37 APPENDIX U.S. Court of Appeals for the Sixth Circuit, Opinion filed October 2, 2009 ....................ccceeeeeeeees la U.S. Court of Appeals for the Sixth Circuit, Judgment filed October 2, 2009 ............00.0..000.2.... 43a U.S. District Court for the Northern District of Ohio, Memorandum Opinion and Order filed ee nn siaucatnmanioueumesebeeseas 44a U.S. Court of Appeals for the Sixth Circuit, Denial of Petition for Rehearing En Banc Od Decemner BG, DOOD.........0.ccccecevesrsecserereveseresers 72a U.S. District Court for the Northern District of Ohio, First Amended Complaint filed NEY SO SIDE io rtcndecsciocicvonas ecindasycdoseraceauitoces 74a Vili TABLE OF AUTHORITIES Page CASES Aktieselskabet AF 21. November 2001 v. Fame Jeans, Inc. 8s Lie om | 27, 28 Am. Tobacco Co. v. United States oon sc wetnneniarephiooussoeventinnts 20 Ashcroft v. Iqbal Be EE GER cecrccccveceseccreecevncevsrcoseesuee passim Bell Atlantic Corp. v. Twombly | | ___; 5 SRR ene passim Cosmetic Gallery, Inc. v. Schoeneman Corp. Ce Ej ae 28 C-O-Two Fire Equip. Co. v. United States 197 F.2d 489 (9th Cir. 1952), cert. denied, a sccctseaidneinciseepiaaesomenwnnnianens 29 Erickson v. Pardus a eernuniiesunn 26 Golden Bridge Tech. Inc. v. Motorola Inc. BET FBG Bie OE Ce, FOGG) occccevccevcvveccccccsscsseevesess 28 Hail v. United Air Lines, Inc. 296 F.Supp.2d 652 (E.D.N.C. 2003)..............22.. 12, 13 In re: Cotton Yarn Antitrust Litig. 505 F.3d 274 (4th Cir. 2007) ..........ccccsccccceserceees 33, 34 In re Elevator Antitrust Litig. we ee | ee 27, 28 Kendall v. VISA U.S.A., Inc. Be Be Pee |) 27 1X TABLE OF AUTHORITIES - Continued Page Klehr v. A.O. Smith Corp. BOERNE D pinvcvsssccereesesstererseore 4, 32, 33, 34, 35 Lawlor v. Loewe 209 F. 721 (2nd Cir. 1913), aff’d, SE A, TEE CIO oseciccontenescssnvesvesncessveeversecneusaeaaie 20 Mandeville Island Farms v. American Crystal Sugar Co. i © RN vi recevnvecvesdevscovvovecresseveieemieaae 34 Monsanto Co. v. Spray-Rite Service Corp. Ee FUE CRUE oantcecceverseccovescocvscvones 15, 18, 19, 22 Morton’s Market, Inc. v. Gustafson’s Dairy, Inc. 198 F.3d 823 (11th Cir. 1999).........................2..82, 33 Northern Pac. Ry. Co. v. United States NS 0 ED oscoversvvecrvevrssecessvveceranedureaseuae 29 O’Loghlin v. County of Orange Bae 6-00 Of bk (BER Cir. 2000) ........020-00000ccossoveress 35, 36 Re/Max Int'l, Inc. v. Realty One, Inc. 173 F.3d 995 (6th Cir. 1999) ..........0........2..cceeee 15, 22 Sheridan v. Marathon Petroleum Co. 5B0 F.54 S00 (7th Cir. 2008) ...........ceovecrevovsvevssseeenees 28 St. Clair v. Citizens Fin. Group No. 08-4870, 2009 U.S.App.LEXIS 16465 EE, UD, BI occeventsvesssvevercovetvessammmana 27 Starr v. Sony BMG Entm' 08-5637, 2010 U.S.App.LEXIS 768 cos ss viceesresys navocutuesenrcvereedestalaeaman 18, 23 TABLE OF AUTHORITIES —- Continued Page Theatre Enters., Inc. v. Paramount Film Distrib. Corp. EI I 19 Tunica Web Advertising v. Tunica Casino Op- erators Assoc., Inc. 496 F.3d 403 (5th Cir. 2007) .20.0....0... 0c cee cece eeece eee ee 28 United States v. Am. Airlines, Inc. ES | | 7 United States v. Borden Co. EE > United States v. Topco Assoc., Inc. nO scensusntorsveveosnrvoene 29 Zenith Radio Corp. v. Hazeltine Research, Inc. a 4,31 STATUTES ES passim a cusuumeownntensennede 1 BiLLS Notice Pleading Restoration Act of 2009, S. EE 28 Open Access to Courts Act of 2009, H.R. 4115, EE 29 XI TABLE OF AUTHORITIES — Continued Page OTHER AUTHORITIES Lee Goldman, Trouble for Private Enforcement of the Sherman Act: Twombly, Pleading Stan dards, and the Oligopoly Problem, 2008 he Sh "Sg | (Sasser eee 23 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW (3d ed. 2007) ........................ eee 26, 34 PHILLIP E. AREEDA & HERBERT HOVENKAMP. ANTITRUST LAW (rev. ed. 1995)... Care oy Petitioners respectfully pray that a writ of certio- rari issue to review the judgment of the United States Court of Appeals for the Sixth Circuit in this case. e OPINIONS BELOW The opinion of the Court of Appeals is reported at 583 F.3d 896. Appendix to Petition for Writ of Certi- orari (“App.”) la-42a. The opinion of the district court (App. 44a-71a) is unreported. iy ee JURISDICTION The Court of Appeals entered its judgment on October 2, 2009. App. 43a. The court denied a timely petition for rehearing with a suggestion for rehearing en banc on December 18, 2009. App. 72a-73a. The jurisdiction of this Court is invoked under 28 U.S.C. § 1254/1). STATUTORY PROVISIONS INVOLVED Section 1 of the Sherman Act, 15 U.S.C. § 1, pro- vides in relevant part: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several! States, or with foreign nations, is hereby declared to be iljegal.” iY) STATEMENT OF THE CASE In Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007), this Court granted certiorari to address the sufficiency of pleading a price-fixing conspiracy in violation of Section 1 of the Sherman Act, establishing the now famous “plausibility standard.” Id. at 556. Two years later, the Court clarified its decision in Ashcroft v. Igbal, 129 S.Ct. 1937, 1950 (2009), explaining that in order to state a claim for antitrust conspiracy, a complaint fails if it merely alleges that the defendants acted in parallel. This case represents the next step in the refinement of the Court’s new standard. Whereas Twombly and Igbal offer examples of complaints that fail to demonstrate plausibility, the complaint here presents the Court an opportunity to further shape the standard’s boundaries using allegations that plausibly suggest conspiracy. In Twombly, the plaintiff supported its conspiracy allegation merely by alleging that the defendants acted in parallel. But the Court - observing that “parallel conduct without more” is as consistent with competitive behavior as it is with conspiratorial behavior — held that a complaint must also plead facts that place the parallel conduct “in a context that raises a suggestion of a preceding agreement.” Twombly, 550 U.S. at 557. Here, the complaint readily surmounts the Twombly require- ment, alleging — among other facts — the specific dates, participants, and locations of meetings among the defendants where they discussed and voted to fix prices immediately before the prices simultaneously increased. In the dissent’s view, the complaint “creates an overwhelming case for the plaintiff to get by a motion to dismiss on the pleading,” “so plain a case that |the defendants] might as well have put the plan in writing.” App. 35a-36a. But, relying on sum- mary judgment law, the majority contorted 7wombly’s observation about “parallel conduct, without more” and misread that case and Igba/ as issuing a license for lower courts to determine, for themselves, whether the parallel conduct was “more likely explained by” the complaint’s allegations or by the defendants’ innocent explanations. By applying summary judgment law to the complaint — which requires evidence that “tends to exclude the possibility that defendants acted independently” — the Sixth Circuit crafted a new rule that flies in the face of Twombly’s admonitions not to “impose a probability requirement” or “apply a_ heightened pleading standard.” 550 U.S. at 556, 569 n. 14. The Sixth Circuit’s wayward interpretation of the plausibility standard also directly conflicts with a decision from the Second Circuit that flatly rejected the same rule adopted by the court below. The holding here also conflicts with the reasoning of decisions from the Third, Ninth and District of Columbia Circuits, all of which have correctly interpreted the Jivomb/y standard. It is no secret that the lower courts, especially the trial courts, have struggled with understanding the plausibility stan- dard in Tiwombly, which has already been cited over 20.000 times in cases and comments. Even here, the 4 district court freely admitted to what it perceived to be a “contradiction” between Twombly and Rule 8’s requirement of a “short plain statement.” The Sixth Circuit’s decision in this case will only serve to greatly increase this uncertainty. As the dissent below correctly observed, “[t/he uniformity needed for the rule of law and equal justice to prevail is lacking.” App. 39a. This case, a price-fixing conspiracy case like Twombly, presents an ideal opportunity to bring consistency to the application of the plausibility standard. The Sixth Circuit's decision also creates a conflict in the circuits concerning the law of continuing antitrust conspiracies, and it independently warrants this Court’s review. Under Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) and Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), a new cause of action accrues each time the defendant transacts for a product or service at a price that has been set by an illegal agreement — even if the agreement itself is many years old. The Fourth and Eleventh Circuits have issued decisions in accord with this established law. But the Sixth Circuit, making its own policy choice, held that the defendants here did not commit “overt acts” when they purchased the plaintiffs’ services at prices set by illegal conspiracy. The Court should grant the petition and act decisively to reverse the decision below. If there is any doubt here about whether review should be granted, the Court should invite the Solicitor Genera! to express the views of the United States. A. Factual Background This case is brought by forty-nine independent travel agents and agencies (“Travel Agents”) against sixteen passenger airlines (“Airlines”), alleging a con- tinuing seven-year conspiracy to fix the commission rates paid by Airlines in return for travel services provided by the Travel Agents. Before 1978, the passenger airline industry was regulated by the government, and travel agent com- mission rates were fixed at 7%. Vol. III] Court of Appeals Joint Appendix (“Jt.App.”) 666. However, once the industry was deregulated, free-market com- petition was allowed to thrive and commissions were driven up to over 10% as passenger airlines sought to increase their ticket sales and market shares. /d. Travel agents have been an integral part of the airlines’ sales strategy for many years. In 1999, travel agents booked over 80% of all domestic full-service tickets CII Jt.App. 700, 702), and during the time relevant to this case, travel agents continued to “write and/or influence the material percentage” of the airlines’ business. II] Jt. App. 657, 671. The air- lines have traditionally paid commissions because they provide important incentives to travel agents, who will book more tickets on airlines that pay them for their services. Complaint (“Compl.”) 4944 88, 89; App. llla-112a. 6 In 1981, three years into deregulation, United unilaterally cut travel agent commissions by impos- ing a flat fee for booked tickets. Compl. 4 83; App. 110a. However, the other airlines continued to pay competitive commission rates and refused to follow United’s move. /d. As a result, United experienced business losses created by travel agents shifting business to those airlines that continued to pay for travel agent services. Jd. Within five days of its enact- ment, United was forced to recant the commission cut in order to stem further sales losses. /d. In 1983, American made a similar attempt, announcing a commission cut from 10% to 7%. Compl. { 84; App. 110a. The response from the travel agent community was “vitriolic” and travel agents threat- ened to “book away” travel to other airlines that con- tinued to pay commissions. Jd. As economics would predict, no other airline followed American’s com- mission cut. Jd. To stem further losses, American recanted the cut because, according to Michael Gunn, the executive partly responsible for setting commission rates, “I felt I would lose a lot of revenue to my competitors by being noncompetitive on the commis- sion front....” III Jt.App. 669. Mr. Gunn testified that the commission reduction resulted in “damage” to American’s “reputation with the travel agency community” that it was “not anxious” to repeat, since “travel agencies write and/or influence the material percentage of” airline travel. III Jt.App. 670-671. American's president, Robert Crandall, was ulti- mately responsible for approving American's travel ~l agent commission rates. Compl. 4 23; App. 92a. Mr. Crandall has a history of attempted price-fixing. Jd. In the mid-1980’s, he was implicated in a price-fixing and monopoly conspiracy case brought by the Depart- ment of Justice in which he was caught on audio tape attempting to fix prices with his competitor, Braniff Airlines’ president Howard Putnam: Crandall: I have a suggestion for you. Raise your goddamn fares twenty per- cent. I'll raise mine the next morning. Putnam: Robert, we — Crandall: You'll make more money and I will too. Putnam: We can't talk about pricing. Crandall: Oh bullsh**, Howard. We can talk about any goddamn thing we wunt io talk about. Compl. 4 23; App. 92a; United States v. Am. Altrlines, Inc., 743 F.2d 1114, 1116 (5th Cir. 1984). Twice in this case, in 1995 and 1997, Mr. Crandall would approve American’s commission cuts using the same modus operandi of following the leader “the next morning.” The conspiracy alleged in this case began in 1995 when Delta capped commissions at $25. Compl. 4 26; App. 93a. A commission “cap,” rather than a per- centage reduction, was a significant departure from normal business practice. Compl. 4 104; App. 116a. In fact, so unusual was Delta’s proposed commission 8 structure that Mr. Gunn testified that the day Delta announced its cut, he had “never done any analytical analysis predicated on such a structure.” III Jt.App. 696. Mr. Gunn’s boss, Mr. Crandall, nevertheless authorized American to match Delta’s move “the next morning” — just as he had illicitly proposed to Braniff.. Compl. 7 103; App. 115a-116a; III Jt.App. 699, 531-532. United and Continental, among other major airlines, followed Delta’s lead within days. Compl. {4 31, 104; App. 94a, 116a. The speed at which the Airlines followed Delta’s commission cut did not allow them the time necessary to independently determine whether the move was financially sound. Compl. 4 103; App. 115a-116a. The conspiracy continued into 1997. On May 27 and 28, 1997 at a meeting of the International Air Transport Association (“IATA”) in Montreal Canada, representatives from United, Delta, KILM, Air Canada and others discussed whether they should agree to lower commissions paid to travel agents outside the United States. Compl. 4 97; App. 113a-114a. At this meeting, the Airlines “communicated with one another for the purpose of developing ... [and] implementing ... their common plan to reduce, cap and eliminate ’ At around the same time, the Airlines settled a case alleging a price-fixing conspiracy among the Airlines involving the use of computer reservation systems to signal ticket price changes. Compl. 7 24; App. 92a-93a. The Department of Justice is currently investigating other price-fixing conspiracies involv- ing many of the airlines here. Compl. 9 25; App. 93a. 9 commissions....” Compl. 491; App. 112a. A few months later, United announced a commission reduc- tion from 10% to 8%. Compl. 4 34; App. 95a. Notably, United made its cut effective the next day, preventing it from “waiting and seeing” whether the other Airlines would follow. Jd. Two business days later, American and Delta matched the cut precisely, also effective the same day. Compl. 94 35, 36; App. 95a- 96a. Mr. Crandall again authorized American’s move. III Jt.App. 531-532. Northwest followed the next day and Continental the day after that. Compl. 9] 37-38; App. 96a. The Airlines followed United’s cut before they would have been able to rationally analyze whether the commission cut was economically bene- ficial. Compl. 44 37-42, 46; App. 96a-97a, 98a-99a. In July, 1998 representatives responsible for setting the travel agent commission rates for Ameri- can, United, Air Canada, Delta, Northwest and others met in Singapore at an [ATA meeting at which they discussed, voted on and agreed to fix travel agent commissions at 9% in markets outside the United States. Compl. 4 98; App. 1l4a. At this meeting, the Airlines communicated with one another “for the pur- pose of developing [and] implementing . . . their com- mon plan... .” Compl. 4 91; App. 112a. Four months later, United announced a commission cap which became effective the same day. Compl. 4 44; App. 98a. Three days later, again like 1997, American and Delta followed suit. Compl. {4 45-46; App. 98a-99a. Continental joined three days after that. Compl. ¥ 47; App. 99a. The speed at which American, Delta and 10 Continental followed United’s reduction did not allow each airline the time necessary to make a rational independent decision. Compl. ¥ 103; App. 115a-116a. In August, 1999 representatives responsible for setting travel agent commissions for United, Air Can- ada, American, Delta, KLM, and Northwest among others, met in Montreal, Canada at an IATA meeting to discuss setting travel agent commissions. Compl. ¥ 101; App. 115a. There, the group voted and agreed to stop paying commissions as a group to travel agents outside the United States. Jd. At roughly the same time, representatives fur American, United, Continental, Delta, and Northwest formed Orbitz, an online ticketing website that competes against travel agents. Compl. { 99; 114a. The executives represent- ing the various airlines on Orbitz’s board of directors were the same executives responsible for setting their respective airline’s commission rates. Jd. They met once every two months. III Jt.App. 533-538, 559. Three months later, as in the past, United led a com- mission reduction in the United States from 8% to 5%, effective the following day. Compl. 4 51; App. 100a. Once again, American matched within 24 hours. Compl. { 52; App. 100a. Continental and Delta followed within four days. Compl. {4 53-56; 100a- 102a. The Airlines acted so closely in time that they could not have been able to independently assess whether following the commission reduction was in their best interest. Compl. 9 103; App. 115a-116a. 1] In April, 2001, the American and Delta repre- sentatives responsible for setting travel agent com- missions met in Las Vegas, where they spent two or more days together, alone on a golf course. Compl. q 102; App. 115a; III Jt-App. 537, 546, 564-565. Four months later, American announced a commission cap effective the following day, and Delta was the first to follow three business days later. Compl. {J 61-63; App. 103a-104a. It was the first time American had led a commission cut since its failed attempt almost two decades earlier in 1983. Compl. 4 23; App. 92a. United matched the commission cap the same day as Delta, and Continental followed 4 days later. Compl. {{] 62, 65; App. 103a-104a. Delta led the ultimate elimination of commis- sions in March, 2002. Tellingly, other Airlines knew Delta would eliminate commissions before it was announced. On March 4, 2002 in San Francisco, a representative of Orbitz told a travel agent that “something big is about to happen that will make Orbitz number 1.” Compl. 4 108; App. 116a-117a. Around the same time, a sales representative of United told several travel agents that Delta was about to eliminate commissions. Compl. 4 107; App. 116a. On March 14, 2002 Delta announced the elimi- nation of commissions, from 5% to 0%, effective the same day. Compl. { 71; App. 106a. American and Con- tinental matched the next business day. Compl. 47 72, 75; App. 106a-108a. United followed two days later. Compl. 9 73; App. 107a. 12 Having created, implemented and enjoyed the fruits of their conspiracy, some of the Airlines filed for voluntary bankruptcy under Chapter 11 of the Bankruptcy Code.* Compl. 94 109-116; App. 117a- 118a. However, when they emerged from bankruptcy, these airlines continued to participate in the con- spiracy by continuing to accept Travel Agents’ ser- vices without paying for them. Compl. 4] 117-119; App. 118a. At no time did any of these airlines affir- matively disavow the conspiracy or take any action to withdraw from it. Compl. 7 119; App. 118a. B. The Lower Courts’ Rulings The Travel Agents sued under Section 1 of the Sherman Act, 15 U.S.C. § 1, alleging the Airlines con- spired to cut and eventually eliminate the payment of commissions. As was their right under the federal rules, Travel Agents opted out of a putative class action captioned Hall v. United Air Lines, Inc., 296 F.Supp.2d 652 (E.D.N.C. 2003), which alleged a con- spiracy to cut and eliminate commissions based on the same facts as the present case. The Hall case involved extensive discovery, including some twenty or more depositions and over one million pages of documentary discovery. Although Hall was ultimately dismissed at summary judgment, Travel Agents opted out of that case well before any disposition. The allegations in Travel Agents’ complaint are based * Relevant on this appeal is United. 13 largely on factual revelations — including specific meeting times, places, participants, and topics dis- cussed — gleaned from the many depositions, meeting minutes, notes, presentations and other evidence from the Hall discovery. Airlines answered the complaint and limited dis- covery ensued.’ In June, 2007 Airlines filed a motion for judgment on the pleadings, asserting the com- plaint failed to meet the standard of this Court’s Twombly decision, issued the previous month. The district court directed Travel Agents to file an amended complaint in light of Twombly and Airlines’ motions were renewed. The district court granted Airlines’ motions, hold- ing that the allegations failed to satisfy the Twombly standard. However, the district court admitted to some confusion about 7wombly’s parameters, openly questioning the vitality of Rule 8’s “short plain statement” and stating “although the Supreme Court says Rule §& still exists, I think there is a contra- diction in the case....” III Jt.App. 778. Seemingly persuaded by the plaintiffs’ failure in Hall rather than the sufficiency of the allegations, the district * To prevent duplication of the Hall discovery, the district court limited document production to that already compiled in Hall and depositions were limited to one “decision-maker” per airline. Travel Agents were only allowed to take one deposition before dismissal. I Jt.App. 105 (District Court’s Order on Motion to Stay Discovery, p. 2); | Jt-App. 106-108 (District Court’s Order on Motion to Compel Discovery, pp. 1-3). 14 court dismembered each group of allegations. First, isolating the parallel conduct allegations, it held them “alone not enough to meet the requirements under Twombly.” App. 64a (emphasis added). Second, isolating the meeting allegations — which depicted the specific time, place, and person involved in meetings that immediately preceded each commission cut — the district court held that “opportunity to conspire, with- out more, does not suggest that there was an agree- ment to reduce commissions.” App. 66a. Third, the complaint alleged that the Airlines’ actions would only be economically rational if they acted in concert. To that, the district court held that Travel Agents’ allegation “is not grounded in fact” (App. 66a), because it “only rellies} on United and American’s failed attempt to institute commission reductions in the 1980’s.” App. 66a. Fourth, the court found that Mr. Gunn’s “deposition testimony indicates that ... there was no agreement or conspiracy.” App. 68a-69a. The district court also held that the claim must be dismissed as to the previously-bankrupt airlincs. It reasoned that the last overt act committed by these airlines was the pre-bankruptcy “commission reduc- tion” of March, 2002 (App. 59a); therefore, the claim “has been discharged by the bankruptcy court.” App. 55a. The court held that “even if the airlines continued to participate in the conspiracy alleged by plaintiffs after having emerged from bankruptcy, that fact alone would not give rise to a new antitrust claim.” App. 58a. 15 In a 2-1 decision, the Sixth Circuit affirmed. The majority opinion began its analysis of the complaint by citing Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752 (1984), a summary judgment case. App 22a. Quoting Monsanto, 465 U.S. at 768, the majority wrote: The correct standard is that there must be evidence that tends to exclude the possibility of independent action. .. . App. 22a (emphasis in majority opinion). The ma- jority also cited the legal standard from its decision in Re/Max Int'l, Inc. v. Realty One, Inc., 173 F.3d 995 (6th Cir. 1999), another summary judgment case. The majority justified its reliance on summary judgment law by claiming it was necessary to interpret Thoombly, writing “it illuminates the plausibility of defendants’ lawful, unchoreographed free-market behavior.” App. 23a, n. 7. Thus, rather than analyze the plausibility of the conspiracy inference based on allegations in the complaint — as Twombly required — the majority in stead analyzed the plausibility of defendants’ inno- cent explanations.’ Giving evidentiary weight to these explanations, the majority procluimed them to be “especially plausible” (App. 25a) and found that “defendants have offered a reasonable, alternative explanation for their parallel pricing behavior.” /d. 4 “ ° ” These “explanations” consist of factual accounts found in the Airlines’ motion to dismiss briefs that purport to explain the Airlines’ behavior as “innocent.” 16 Ultimately finding the Airlines’ explanations more persuasive than the allegations in the complaint, the majority concluded: “[blased on these facts, we con- clude that each defendant had a reasonable, inde- pendent economic interest in adopting a competitor's commission cut rather than to maintain the status quo.” App. 26a. Distilling its analysis into a legal rule, it held: We therefore hold that plaintiffs have failed to allege sufficient facts plausibly suggesting (not merely consistent with) an agreement in violation of § 1 of the Sherman Act because defendants’ conduct was not only compatible with, but instead was more likely explained by, lawful, unchoreographed free-market be- havior. App. 26a (citation omitted). With respect to the previously-bankrupt Airlines, the Sixth Circuit recognized the “continuing conspiracy” doctrine in antitrust law, and that a new cause of action accrues with the commission of each overt act. App. 10a-lla. The court conceded that the purchase of a price-fixed product is, as a matter of law, an overt act. Id. The lower court further recognized that a violation begun pre-bankruptcy can continue post-bankruptcy if overt acts are committed after discharge. Id. Nevertheless, it held the Airlines had committed no overt acts post-bankruptcy, since each time they accepted Travel Agents’ services without paying for them, the Airlines were “merely reaffirm[ing] a 17 previous act,” and not committing a new act. App. lla. Judge Merritt dissented, concluding that “|tlhe factual allegations in this case create an overwhelm- ing case for the plaintiff to get by a motion to dismiss on the pleading.” App. 35a-36a. Describing the com- plaint, he determined that “the facts alleged present so plain a case that |the Airlines] might as well have put the plan in writing” — “[nJot as strong as alle- gations raising an inference that ‘the sun will rise in the morning’ based on history, but strong enough to be more than ‘plausible.’” App. 36a. The complaint included “specific, time-and-place factual allegations” that the Airlines “met frequently over the period the airlines were acting in unison and according to plan.” App. 37a. Judge Merritt correctly noted that the complaint “provides specific times and locations of numerous meetings attended by the defendants ... and most importantly, the complaint ties the dates of those meetings with industry-wide simultaneous rate cuts that followed immediately thereafter.” App. 38a. He concluded, “|rjJeading these allegations as a whole, the complaint clearly satisfies the Twombly stan- dard.” The dissent specifically criticized the majority’s application of the wrong legal standard: Here my colleagues have seriously mis- applied the new standard by requiring not simple “plausibility,” but by requiring the plaintiff to present at the pleading stage a strong probability of winning the case and 18 excluding any possibility that the defendants acted independently and not in unison. App. 34a. Noting the numerous incidents of Twombly’s misapplication in the lower courts, the dissent called upon t*sis Court to “make it clear that Twombly may not be used, as my colleagues propose, as a cover for repealing” the antitrust laws. App. 42a. + REASONS FOR GRANTING THE PETITION I. Review Is Warranted To Resolve A Con- flict Between The Sixth Circuit’s Decision And Decisions From The Second Circuit And This Court Regarding An Important And Recurring Issue Of Antitrust Con- spiracy Pleading According to the Sixth Circuit’s new rule, if a complaint satisfies Twombly by alleging facts placing the defendants’ parallel behavior “in a context that raises a suggestion of preceding agreement,” Twombly, 550 U.S. at 557, the complaint must nevertheless be dismissed unless it also “tends to exclude the possi- bility of independent action.” App. 22a (citing Mon- santo, 465 U.S. at 768). The Second Circuit created a direct conflict with this rule when it flatly rejected it in Starr v. Sony BMG Entmt, 08-5637, 2010 U.S.App.LEXIS 768, *24 (2nd Cir. 2010), where it held: “{(djefendants ... argue that a [Sherman Act] plaintiff must allege facts that ‘tend[ ] to exclude independent self-interested conduct 19 as an explanation for defendants’ parallel behavior. This is incorrect.” The rule below also directly conflicts with specific pronouncements of this Court. Relying on the Mon- santo summary judgment standard, the Sixth Circuit held that Travel Agents’ complaint failed to allege a plausible conspiracy because “defendants’ conduct” was “more likely explained by” Airlines’ innocent ex- planations than by the complaint’s well-pled allega- tions. App. 26a. This holding relies on a subtle, but meaningful, misquotation from /qbal/ that results in a grave misapplication of Twombly. By requiring the complaint to show that defendants’ behavior was “more likely explained by” illegal conduct than by innocent conduct, the Sixth Circuit’s rule demands a showing of probability. It therefore directly conflicts with Tiwombly’s admonition “not [to] impose a proba- bility requirement at the pleading stage” or to “apply any ‘heightened’ pleading standard.” Thombly, 550 U.S. at 556, 569, n. 14. A. The Sixth Circuit’s New Pleading Rule Directly Conflicts Wit 1 Decisions Of The Second Circuit And This Court, And It Conflicts In Principle With Decisions From The Third, Ninth, And D.C. Circuits The “crucial question” in a Section 1 case is whether the challenged conduct “stem|s] from inde- pendent decision or from an agreement, tacit or express.” Theatre Enters., Inc. v. Paramount Film 20 Distrib. Corp., 346 U.S. 537, 540 (1954). “(T]he law does not require the proof of conspiracy by direct and positive proof” because “[clonspirators do not put their agreements in writing... .” Lawlor v. Loewe, 209 F. 721, 725 (2nd Cir. 1913), aff’d, 235 U.S. 522 (1915). Rather, a conspiracy may be proven entirely through circumstantial evidence. Am. Tobacco Co. v. United States, 328 U.S. 781, 810 (1946). Allegations of defendants’ “parallel conduct” (e.g., similar pricing or other market bchavior) is circumstantial evidence that may be used to support a conspiracy claim. How- ever, “[w]Jhile a showing of parallel business behavior is admissible circumstantial evidence from which the fact finder may infer agreement, it falls short of conclusively establishing agreement... .” Twombly, 550 U.S. at 553. The complaint in Twombly “proceed[ed] exclu- sively via allegations of parallel conduct.” Twombly, 550 U.S. at 565, n. 11. And while “an allegation of parallel conduct ... gets the complaint close to stat- ing a claim,” “|wlithout more, parallel conduct does not suggest conspiracy.” Jd. at 556-557. The Court held: “when allegations of parallel conduct are set out in order to make a § 1 claim, they must be placed in a context that raises a suggestion of a preceding agreement, not merely parallel conduct that could just as well be independent action.” Jd. at 557. Since an allegation of parallel conduct “gets the complaint close to stating a claim,” the minimal additional facts necessary to state a claim need only “nudge [the] 21 claim across the line from conceivable to plausible.” Id. at 570. The complaint here alleges facts that bulldoze the claim across the plausibility line creating, in Judge Merritt’s view, “an overwhelming case for the plaintiff to get by a motion to dismiss.” App. 36a. The complaint not only alleges lock-step parallel com- mission cuts; it alleges facts that place these parallel moves in a context that suggests conspiracy. For instance, it alleges the specific date and location of meetings where participants voted to jointly reduce commissions immediately before the Airlines simul- taneously cut commissions. Based on facts from the industry’s history, the complaint alleges that the commission reductions were extraordinary departures from normal business practice, and that the loss of revenue and market share from leading an un- matched commission cut created a risk so great that no rational airline would act without knowing the others would follow along. The complaint alleged that the leader of each cut unnecessarily increased the already substantial risk of business loss by making the cuts effective the day of their announcement, needlessly preventing the leader from waiting to see if others would follow. Each lead cut was followed so closely in time that no rational firm could timely analyze the pros and cons of following. The complaint alleged the craftsmanship of Robert Crandall who, as the CEO of American, matched the 1995 com- mission reduction within 24 hours, a modus operandi strikingly similar to what he illegally proposed over a 22 surreptitiously tape-recorded conversation with his competitor just a few years earlier. App. 36a. “Reading these allegations as a whole, the complaint clearly satisfies the Twombly standard.” App. 38a. But here, surmounting Twombly’s requirements was _ not enough. The Sixth Circuit began its march toward affirm- ing dismissal by citing this Court’s decision in Mon- santo Co. v. Spray-Rite Service Corp., 465 U.S. 752, 768 (1984) — a summary judgment case — and then adding its own emphasis, the majority quoted the summary judgment standard from that decision: The correct standard is that there must be evidence that tends to exclude the possibility of independent conduct. App. 22a (emphasis in majority opinion). The ma- jority also extensively explained Re/Max Int'l, Inc. v. Realty One, Inc., 173 F.3d 995 (6th Cir. 1999), another summary judgment case. Relying on these cases, the Sixth Circuit held that the complaint did not allege facts plausibly suggesting a conspiracy because it failed to exclude the possibility that the Airlines acted independently.’ App. 25a-26a. * The dissent correctly summarized the standard employed by the majority: [M]y colleagues have seriously misapplied the new standard ... by requiring the plaintiff to... exclude] any possibility that the defendants acted independ- ently and not in unison. (Continued on following page) 23 The Second Circuit roundly rejected precisely this rule in Starr v. Sony BMG Music Entmt, No. 08- 5637, 2010 U.S.App.LEXIS 768 (2nd Cir. Jan. 13, 2010), creating a direct circuit conflict. Just as here, Starr involved a Section 1 conspiracy complaint that relicd on circumstantial evidence, including parallel conduct. But, unlike Twombly, the complaint in Starr also alleged facts that placed the defendants’ parallel conduct in a setting that suggested a preceding agreement, just as here. Jd. at *20-*23. The Starr de- fendants’ principal argument was precisely the Sixth Circuit’s holding in this case, that the complaint should be dismissed because it failed to exclude de- fendants’ innocent explanations. The Second Circuit disagreed, holding: Defendants first argue that a plaintiff seek- ing damages under Section 1 of the Sherman Act must allege facts that ‘tend[ ] to exclude independent self-interested conduct as an ex- planation for defendants’ parallel behavior.’ This is incorrect. Id. at *24. The Second Circuit correctly observed that the defendants’ proposed standard was reserved for summary judgment and was not to be applied on a motion to dismiss. /d. App. 34a. Academic observers have also concluded that this case erroneously applied the summary judgment standard. Lee Goldman, Trouble for Private Enforcement of the Sherman Act: Twombly, Pleading Standards, and the Oligopoly Problem, 2008 B.Y.U.L.Rev. 1057, 1090. 24 The Sixth Circuit majority attempted to justify its reliance on the summary judgment standard on the ground that “it illuminates the plausibility of defendants’ lawful, unchoreographed free-market be- havior.” App. 23a, n. 7. And in fact, rather than ana- lyze the plausibility of the conspiracy inference — as Twombly required — here, the Sixth Circuit analyzed the plausibility of innocent explanations proffered by the Airlines in their briefings. App. 25a-26a. Finding these explanations “especially plausible,” the majority asserted that each Airline’s decision to match a com- mission cut was “arguably a reasoned, prudent busi- ness decision.” App. 30a (emphasis added). Relying on these explanations, the majority found that “defen- dants have offered a reasonable, alternative explana- tion for their parallel pricing behavior.” App. 26a. Then, citing Iqbal, the Court of Appeals held: We therefore hold that plaintiffs have failed to allege sufficient facts plausibly suggesting an agreement in violation of § 1 of the Sher- man Act because defendants’ conduct “was ... more likely explained by lawful, unchore- ographed free-market behavior.” App. 26a (quoting Iqbal, 129 S.Ct. at 1950). Although the majority’s holding relied on the quoted portion of a sentence from /qgbal, it misquoted the relevant part, fundamentally altering its mean- ing. The quoted passage from /gbal used the “more likely explained by” language only in reference to “parallel conduct,” not all of “defendants’ conduct.” It reads in full: 25 Acknowledging that parallel conduct was consistent with an unlawful agreement, the {Twombly| Court nevertheless concluded that it did not plausibly suggest an illicit accord because it was not only compatible with, but indeed was more likely explained by, lawful, unchoreographed free-market behavior. Iqbal, 129 S.Ct. at 1950 (emphasis added). Iqbal was not laying down a new rule; it was simply explaining what the Court observed in Twombly: that parallel conduct, without more, is ambiguous evidence: The inadequacy of showing parallel conduct or interdependence, without more, mirrors the ambiguity of the behavior: consistent with conspiracy, but just as much in line with a wide swath of rational and competi- tive business strategy unilaterally prompted by common perceptions of the market. Twombly, 550 U.S. at 554 (emphasis added). This Court never intended these passages to be read as a license for lower courts to apply the sum- mary judgment standard at the motion to dismiss stage, as the foremost antitrust commentators have explained: In order to avoid a motion to dismiss, a plaintiff’s allegations must “plausibly sug- gest| |” conspiracy. By contrast, in order to avoid summary judgment, the evidence must “tend to rule out the possibility that the de- fendants were acting independently.” Ob- serve that the Supreme Court [in Twombly] 26 did not hold that the same standard applies to a complaint and a discovery record.... The ‘plausibly suggesting’ threshold for a conspiracy complaint remains considerably less than the ‘tends to rule out the possi- bility’ standard for summary judgment. 2 PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTI- TRUST LAW 4 307d1 (3d ed. 2007) (emphasis in origi- nal). The Sixth Circuit’s new rule has interpreted Twombly in precisely the wrong way, creating a direct conflict with the law of this Court. By demanding the complaint to show the conspiracy “was more likely ex- plained by” illegal conduct as opposed to independent conduct, it required a showing of probability, which Twombly specifically denounced. Twombly, 550 U.S. at 556 (“[alsking for plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage ... ”). By requiring the com- plaint to exclude Airlines’ explanations of the alleged illegal conduct, it held the complaint to a heightened pleading standard, which Twombly also specifically forbade. Id. at 569, n.14 (“we do not apply any ‘heightened’ pleading standard....”); Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555 (“the statement need only ‘give the de- fendant fair notice of what the ... claim is and the grounds upon which it rests.’”)). Other decisions from the Second and Ninth Circuit, as well as an unpublished opinion from the Third Circuit have correctly limited the “more likely 27 explained by” language to complaints that have only alleged parallel conduct. In re Elevator Antitrust Litig., 502 F.3d 47, 51 (2nd Cir. 2007); Kendall v. VISA U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008); St. Clair v. Citizens Fin. Group, No. 08-4870, 2009 U.S.App.LEXIS 16465, *7 (8rd Cir. Jul. 23, 2009). And, in a Lanham Act case, the District of Columbia Circuit has held that “Twombly was con- cerned with the plausibility of an inference of con- spiracy, not with the plausibility of a claim. A court deciding a motion to dismiss must not make any judgment about the probability of the plaintiff’s suc- cess.” Aktieselskabet AF 21. November 2001 v. Fame Jeans, Inc., 525 F.3d 8, 17 (D.C. Cir. 2008). As Judge Merritt accurately stated as a result of the majority’s new rule, “[t|he uniformity needed for the rule of law and equal justice to prevail is lacking.” App. 39a. To re-establish consistency with the Jower courts’ interpretation of Twombly and its application to Section 1 conspiracy complaints, the Court should grant the petition and reverse the decision below. B. The Sixth Circuit’s New Pleading Rule Involves An Important Recurring Issue Of Antitrust Law There may be no more fundamental issue in civil litigation than the requirements for properly pleading a claim to unlock the doors to discovery and, as such, this case presents a recurring issue of national 28 importance to both antitrust cases specifically and civil cases generally. The Twombly decision is one of the most dis- cussed — and misunderstood — cases in recent history, having been cited by the courts and commentators more than 20,000 times in its barely three-year history. There have already been almost a dozen ap- pellate decisions applying, interpreting or discussing Twombly in an antitrust context.” And, there have been many district court opinions misapplying the Twombly standard across the country. App. 39a (cit- ing cases). Courts have noted the widespread confu- sion within the lower courts about how to properly apply Twombly. Aktieselskabet, 525 F.3d at 15 (noting that “[mJany courts have disagreed about the import of Twombly”); In re Elevator Antitrust Litig., 502 F.3d at 50. In fact, profoundly worrisome is the admission the district court in this case made that “although the Supreme Court says Rule & still exists, | think there is a contradiction in the case... .” II] Jt-App. 778. The clarity of pleading rules is not a backwater issue. Congress has introduced two bills to clarify the post- Twombly pleading rules. Notice Pleading Restoration 6 In addition to those cited above, see e.g. Tunica Web Advertising v. Tunica Casino Operators Assoc., Inc., 496 F.3d 403, 409 (5th Cir. 2007); Cosmetic Gallery, Inc. v. Schoeneman Corp., 495 F.3d 46, 54 (3rd Cir. 2007); Sheridan v. Marathon Petroleum Co., 530 F.3d 590, 595 (7th Cir. 2008); Golden Bridge Tech. Inc. v. Motorola Inc., 547 F.3d 266, 271 (5th Cir. 2008). £o Act of 2009, S. 1504, 111th Cong. (2009); Open Access to Courts Act of 2009, IL.R. 4115, 111th Cong. (2009). Significant risks attend a misunderstood conspir- acy pleading standard. While Twombly has certainly had its intended effect of limiting antitrust discovery in meritless cases, its reach has been vastly extended into the termination of perfectly plausible complaints, like the one here. Concern about false positives in cases brought by overly-litigious plaintiffs is one thing, but the misapplication of a pleading rule that thwarts Congressional intent is quite another. The Sherman Act has been called “the Magna Carta of free enterprise,” United States v. Topco Assoc., Inc., 405 U.S. 596, 610 (1972), and its goals are no less lofty than the protection and preservation of our na- tional democracy, society and economy. Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 4 (1958). Yet, the Sixth Circuit’s new rule effectively eliminates conspir- acy cases brought on circumstantial evidence. It “pro- poses to require either an express written agreement among competitors or a transcribed oral agreement to fix prices; [njothing less will do.” App. 42a. But if plaintiffs are prohibited from relying on = circum- stantial evidence to prove an agreement, “conspira- cies would flourish; profit, rather than punishment, would be the reward.” C-O-Two Fire Equip. Co. v. United States, 197 F.2d 489, 194 (9th Cir. 1952), cert. denied, 344 U.S. 892 (1952). Antitrust’s goals are compromised each time a properly-pled conspiracy complaint is prematurely dismissed, which has been frequent enough without the Sixth Circuit's new stringent requirements. App. 39a (“district court 30 judges across the country have dismissed a large majority of Sherman Act claims on the pleadings misinterpreting the standards from Twombly and Iqbal... .”). Misapplication of the law is particularly harmful if wielded by lower courts to circumvent the will of Congress. App. 42a. In his dissent, Judge Merritt best described the need for review when he urged this Court “to make it clear that Twombly may not be used, as my colleagues propose, as a cover for repealing regulation of the marketplace through pri- vate antitrust enforcement.” App. 42a. In short, this case presents an ideal vehicle to clarify the plausibility standard and more concretely define its outer boundaries. The Court should grant review and act decisively to reverse the Sixth Circuit’s wayward interpretation of the plausibility standard. II. Review Is Independently Warranted To Re- solve A Conflict Created By The Sixth Circuit’s Decision With Decisions Of The Fourth And Eighth Circuits And With Decisions Of This Court Regarding The Proper Pleading Of “Overt Acts” In The Continuing Conspiracy Doctrine The Sixth Circuit’s decision presents a second issue independently worthy of review involving the pleading of the continuing conspiracy doctrine in a bankruptcy setting. In conflict with decisions from Fourth and Eighth Circuits, the Sixth Circuit held that the defendants did not commit overt acts, as a 3] matter of law, when they repeatedly purchased Travel Agents’ services at prices set by the conspiracy (App. lla), reasoning that each purchase was “merely the reaffirmation of a previous act.” App. 10a. The complaint alleges that after the Airlines’ conspiracy was implemented, major players involved in its creation entered into bankruptcy.’ Compl. q{ 109-116; App. 117a-118a. But, by continuing to purchase services at the conspiracy price post-bank- ruptcy, these airlines committed acts that arose post- discharge and are liable for the resulting damages. Specifically, the complaint alleges that “upon emerging from bankruptcy” (Compl. 4 117; App. 118a), these Airlines, “through their conduct,” “conformjed] to the commission levels and caps to which their co- conspirators had agreed” (Compl. 4 118; App. 118a), resulting in a “continuing offense” to violate the antitrust laws. Compl. { 109; App. 117a. In effect, the ¢ conspiracy “straddled” the bankruptcy period, and by continuing to purchase Travel Agent services at the conspiracy rate, the Airlines committed overt acts resulting in new post-discharge causes of action. “In the context of a continuing conspiracy to violate the antitrust laws ... each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused-by that act.” Zenith Radio Corp. v. Hazeltine Research, Inc., ' The complaint alleges that seven separate airlines filed for bankruptcy. The only one relevant on this appeal is United. 32 401 U.S. 321, 338 (1971). In a continuing price-fixing conspiracy, it is not the agreement itself or the implementation of the conspiratorial price, but the purchase of the product at the fixed rate that makes up the last overt act establishing a new cause of action. In Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), this Court explained: Antitrust law provides that, in the case of a “continuing violation,” say a price fixing conspiracy that brings about a series of unlawfully high priced sales over a period of years, “each overt act that is part of the violation and that injures the plaintiff,” e.g., each sale to the plaintiff, “starts the statutory period running again... .” Id. at 189 (quoting 2 AREEDA & HOVENKAMP, { 338b p. 145 (rev. ed. 1995)) (emphasis added). “A conspiracy thus continued is in effect renewed during each day of its existence.” United States v. Borden Co., 308 U.S. 188, 202 (1939). The Sixth Circuit recognized the validity of the continuing conspiracy doctrine (App. 10a), and acknowledged that a new cause of action arises with the commission of each overt act. App. lla. However, it held that when the Airlines’ continued to purchase Travel Agents’ services at the conspiracy rate, they did not commit overt acts. App. 10a-11a. This holding conflicts with the Eleventh Circuit's decision in Morton’s Market, Inc. v. Gustafson’s Dairy, 33 Inc., 198 F.3d 823 (11th Cir. 1999), a Section 1 price- fixing conspiracy case with facts similar to those here. Morton's Market involved a twenty-year conspiracy beginning in the 1970s among the large dairy pro- ducers in Florida to fix the prices of milk sold to public schools. /d. at 826. 'The last meeting among the defendants to set prices occurred in 1987. However, sales of the milk at the fixed price continued until 1992. Plaintiffs filed their complaint in 1993. The dairies moved for summary judgment on the ground the action was time-barred by the four-year statute of limitations, arguing the last overt act was the setting of the fixed price in 1987. The Eleventh Circuit re- jected Dairies’ argument and reversed the district court's decision. Quoting the Klehr passage above, the Court of Appeals correctly stated that the last overt act was plaintiff’s purchase of the milk at the fixed price: [Wihen sellers conspire to fix the price of a product, each time a customer purchases that product at the artificially high price, an antitrust violation occurs and a cause of action accrues. Id. at 828. “Even if there were no price-fixing con- versations after 1987,” the Court explained, “if plain- tiffs purchased milk at a fixed price after that date, the purchase would constitute an overt act that in- Jured it.” Id. (emphasis added). The Fourth Circuit’s decision in Jn re: Cotton Yarn Antitrust Litig., 505 F.3d 274 (4th Cir. 2007) also conflicts with the holding below. There, the Fourth 34 Circuit upheld the sufficiency of an overt act allega- tion in a complaint pleading a continuing conspiracy in violation of Section 1, as here. The Court of Appeals held that “luJnder Klehr,” the defendants have committed an overt act “so long as the plaintiffs made a purchase from the Defendants.” Jd. at 290- 291. Thus, the statute of limitations did not begin running when the defendants decided to fix prices or implemented the fixed price; rather, each transaction at the fixed price constituted an overt act and a new claim accrued. /d. It makes no difference whether the overt act is the sale of a price-fixed product or, as here, the purchase of a price-fixed service. The law does not distinguish between price-fixing conspiracies among sellers or among buyers, Mandeville Island Farms v. American Crystal Sugar Co., 334 U.S. 219, 253 (1948), because “price fixing by buyers raises the same issues and poses the same dangers as price fix- ing by sellers.” 12 AREEDA & HOVENKAMP, { 2010, p. 123 (3d ed. 2007). Neither does the law contemplate a distinction between conspiracies to fix prices of products or services. “|Tjhe law against buying and selling cartels covers services as well as goods.” /d. at 125. Therefore, since the sale of a price-fixed product constitutes an overt act, the purchase or acquisition of a service constitutes an overt act. The Airlines’ conspiracy to completely eliminate the commission, as opposed to continuing to pay some commission, may also have tainted the Sixth Circuit’s analysis and distracted it from applying the law. But, 35 for purposes of pleading an overt act, the law cannot distinguish between a commission cut to 0% or to some positive rate, like 1%, under the mistaken reasoning that the latter involves the payment of some money (an act); whereas, the former does not. If that were the law, and the Sixth Circuit’s rule is susceptible to that reading, defendants would have the perverse incentive to harm plaintiffs maximally in order to escape liability completely. Moreover, while the Sixth Circuit described the alleged overt act as “United’s decision to maintain its 0% commission policy,” that decision in fact required affirmative action on United’s part, including the delivery of the booked ticket, the acceptance of money in return for the ticket, and the refusal to pay the Travel Agent who booked the ticket. ? Finally, the Sixth Circuit’s decision contains a fundamental inconsistency. The Court of Appeals distinguished AKlehr on the grounds that it “did not involve a formerly bankrupt corporation.” App. 10a. Therefore, the Airlines’ conduct could not “qualif[y] as a continuing violation.” Jd. The Sixth Circuit thus determined that the continuing violation doctrine does not apply to a claim surviving through a temporary bankruptcy period. On the other hand, the Sixth Circuit also cited with approval the Ninth Circuit’s decision in O’Loghlin v. County of Orange, 229 F.3d 871, 875 (9th Cir. 2000) for the proposition that “a successfully reorganized debtor ... is liable for any independent conduct that arises after the confirmation of its bankruptcy plan.” App. 10a. 36 O’Loghlin specifically applied the continuing violation doctrine to a violation that straddled the bankruptcy period, as here. It held that a_ post- bankruptcy violation is not discharged if it is a “con- tinuation of the [defendant’s] illegal pre-discharge behavior.” O’Loghlin, 229 F.3d at 873. In doing so, it stated that “an important purpose of the continuing violation doctrine is to prevent a defendant from using its earlier illegal conduct to avoid liability for later illegal conduct of the same sort.” Jd. The Ninth Circuit concluded: The district court’s holding would allow a defendant to use pre-discharge violations .. . to insulate itself from liability for post- discharge violations, so long as the pre- and post-discharge violations were part of the same course of conduct.... The bankruptcy laws provide no justification for such a re- sult. Their purpose is to provide a “fresh start” to a discharged debtor.... A “fresh start” means only that; it does not mean a continuing license to violate the law. Id. If in distinguishing Klehr on the ground it did not involve bankruptcy, the Sixth Circuit refused to apply the continuing conspiracy doctrine to facts that straddle a bankruptcy proceeding, it directly conflicts with the Ninth Circuit’s decision in O’Loghlin. It, on the other hand, it concedes the proper application of the continuing conspiracy doctrine in this case, it conflicts with the decisions defining an “overt act,” set forth above. 37 CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, JOSEPH M. ALIOTO, JR. Counsel of Record JOSEPH M. ALIOTO, SR. THOMAS PAUL PIER ALIOTO LAW FIkM 555 California Street Thirty-First Floor San Francisco, California 94104 (415) 434-8900 March, : iw 10 Counsel for Petitioners la 583 F.3d 896 UNITED STATES COURT OF APPEALS | FOR THE SIXTH CIRCUIT In re: TRAVEL AGENT COMMISSION ANTITRUST LITIGATION. No. 07-4464 TAM TRAVEL, INC., et al., Plaintiffs-Appellants, Ve DELTA AIRLINES, INC., et al., Defendants-Appellees. Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 03-30000 — Peter C. Economus, District Judge Argued: October 24, 2008 Decided and Filed: October 2, 2009 Before: MERRITT, BOGGS, and GRIFFIN, Circuit Judges. COUNSEL ARGUED: Joseph M. Alioto, Jr., Thomas Paul Pier, ALIOTO LAW FIRM, San Francisco, California, for Appellants. Peter K. Huston, LATHAM & WATKINS, 2a San Francisco, California, James A. Reeder, Jr., VINSON & ELKINS L.L.P., Houston, Texas, Lee H. Simowitz, BAKER & HOSTETLER, Washington, D.C., for Appellees. ON BRIEF: Joseph M. Alioto, Jr., Thomas Paul Pier, Joseph Alioto, Sr.,. ALIOTO LAW FIRM, San Francisco, California, for Appellants. James A. Reeder, Jr., Lauren J. Harrison, Elizabeth A. Pannill, VINSON & ELKINS L.L.P., Houston, Texas, for Appellees. GRIFFIN, J., delivered the opinion of the court, in which BOGGS, J., joined. MERRITT, J. (pp. 22-28), delivered a separate dissenting opinion. OPINION GRIFFIN, Circuit Judge. Plaintiff travel agencies appeal the district court’s dismissal of their Amended Complaint for failure to state a claim under § 1 of the Sherman Antitrust Act. Plaintiffs allege that defen- dants conspired to reduce, cap, and eventually elimi- nate the payment of base commissions in a concerted effort to drive plaintiffs out of business in violation of 15 U.S.C. § 1. We affirm. In doing so, we hold that plaintiffs’ claims against United Airlines were dis- charged in bankruptcy and that plaintiffs’ claims against the remaining defendants failed to allege sufficient facts to plausibly suggest a prior illegal agreement. Plaintiffs are the owners of forty-nine travel agencies engaged in the business of selling defendants’ airline services. When a plaintiff sold an airline ticket before 2002, it received a sales commission from the servicing airline that equaled a percentage of the purchased ticket price. This practice, commonly referred to as the payment of “base commissions,” was industry-wide. Plaintiffs allege a §1 conspiracy based on a series of uniform base commission cuts adopted by defendants over a seven-year period. According to plaintiffs, each defendant’s decision to match its competitors’ base commission cut was the product of defendants’ prior illegal agreement to climinate the practice of paying all base commissions — a result achieved in March 2002. Plaintiffs assert the conspiracy began in 1995, when Delta, American, Northwest, United, and Con- tinental each announced a $25 cap on base commis- sions for one-way domestic tickets and a $50 cap for ' The following airlines were named as defendants in plain- tiffs’ Amended Complaint: Air Canada, Alaska Airlines, Inc. (“Alaska”), Alaska Air Group, Inc. (“AAG”), ATA Airlines, Inc., American Airlines, Inc., America West Airlines, Inc., Continental Airlines Inc., Delta Air Lines, Inc., Hawaiian Airlines, Inc., Horizon Air Industries, Inc., Frontier Airlines, Inc., KLM Royal Dutch Airlines, Northwest Airlines, Inc., United Airlines, Inc., US Airways, Inc., and U.S. Airways Group, Inc. Aa round-trip domestic tickets. Plaintiffs further contend that United’s decision to cut its base commission rate on September 18, 1997, from 10% of the purchased ticket price to 8% is further evidence of the alleged illegal agreement because American, Delta, North- west, US Airways, Continental, and America West each matched United’s commission cut on or before September 29, 1997. On March 31, 1998, Frontier Airlines announced that it, too, would reduce its base commission rate from 10% to 8%, as did Alaska Airlines on September 30, 1997. Plaintiffs allege that defendants’ conspiracy continued into mid-November 1998, when United im- posed base commission caps of $50 and $100 for onc- way and round-trip international airfare, respectively. By December 2, 1998, American, Delta, Continental, Northwest, and US Airways each adopted United’s $50 and $100 base commission caps. Almost one year later, on October 7, 1999, United instituted its third commission cut, reducing its base commission rate from 8% to 5% on all domestic and international flights. American, Delta, Northwest, Continental, and US Airways each adopted United’s 5% commission cut by the following week. America West and Alaska each matched United’s 5% com- mission cut on October 18, 1999, as did Frontier in November 1999. On August 17, 2001, American implemented base commission caps of $10 for one-way tickets and $20 for round-trip tickets, effective the following day. va Within ten days, United, Delta, Northwest, Continen- tal, US Airways, and America West each adopted American’s $10 and $20 caps. Frontier and Alaska followed suit on September 4, 2001, and November lL, 2001, respectively. Finally, on March 14, 2002, Delta announced that it would eliminate its practice of paying base com- missions to travel agencies for both domestic and international airfare, effective immediately. Within ten days, American, United, Northwest, Continental, US Airways, and America West likewise climinated the payment of base commissions. Frontier and Alaska followed suit in late May 2002. Plaintiffs allege that each defendant’s decision to cut, cap, and eventually eliminate its practice of paying travel agencies a base commission would not have occurred without collusion because such action, if taken independently, was contrary to the individual defendant’s economic self-interest. Plaintiffs point to United’s unsuccessful attempt to cut base commission rates in 1981 and American’s similar failed attempt in 1983 as evidence of collusion in the present case. In addition, plaintiffs’ Amended Complaint refers to the deposition of a former American Airlines executive, Michael Gunn, who testified that “industry consensus” was necessary for industry-wide commission cuts to hold. Gunn also testified that “he had to match commission cuts exactly or he would undercut the movement.” Plaintiffs assert that Gunn’s statements are persuasive evidence of defendants’ common motive to conspire. ba As additional support for the alleged conspiracy, plaintiffs point to several meetings where defendants had an opportunity to conspire, including committee meetings of the International Air Transport Associa- tion in 1997 and 1998, as well as industry meetings such as the “Conquistadores Del Cielo” (Conquerors of the Sky), the Air Transport Association, the Japan Air Summit, the British Air Summit, the Paris Air Show, the Alex Brown Transportation Conference, the International Aviation Symposium, and the Merril] Lynch conference. Plaintiffs do not identify defendants’ attendees by name or title. More specifically, the Amended Complaint asserts that “in mid-1999 an Executive Vice-President of Marketing & Distribution for Northwest Airlines, a Senior Vice President of Planning for US Airways, and a Senior Vice President of Marketing for Ameri- can met for three hours in a Dallas hotel conference room.” Plaintiffs further allege that “liJn 2001, a Delta senior executive met for a weekend of golf and socializing at the home of an American executive responsible for setting American’s commission levels.” By May 31, 2002, each defendant had eliminated ils practice of paying travel agencies a base commis sion. In addition, several defendants filed for and have emerged from Chapter 11 bankruptcy, including Delta, Northwest, and United.’ For the purposes of this appeal, only United’s bankruptcy is relevant. United filed its Chapter 1] bankruptey petition on (Continued on following page) On April 9, 2003, plaintiff Tam Travel, Inc. and forty-eight other travel agencies filed a complaint against defendants for illegally agreeing to cap, cut, and eliminate hase commissions in violation of § 1 of the Sherman Antitrust Act. 15 U.S.C. § 1. On Sep tember 13, 2007, plaintiffs had dismissed defendants US Airways and US Airways Group from the suit without prejudice. On September 14, 2007, the district court determined that the Supreme Court’s decision in Bell Atlantic Corp. v. Twombly, 550 U.S 544 (2007), could impact the present case and allowed plaintiffs to file an Amended Complaint. On Septem- ber 28, 2007, several defendants filed a joint motion to dismiss the Amended Complaint under FED. R. CI\ P. 12(b\6). On October 29, 2007, the district court granted defendants’ motion to dismiss, ruling that: (1) plain- tiffs failed to allege any conduct other than sporadic parallel conduct regarding America West, Alaska, Frontier, and Horizon; (2) plaintiffs failed to allege any paralie! conduct as to KLM; (3) the emergence of Northwest, United, and Delta from bankruptcy discharged plaintiffs’ claims; (4) with regard to Con tinental and United, plaintiffs failed to aver sufficient December 9, 2002, and the bankruptcy court confirmed its reorganization plan on January 20, 2006. Plaint.ffs opted out of the putative class in Hall v. United Air Lines, Inc., 296 F. Supp. 2d 652 (E.D.N.C. 2003) Code defines a “debt” as “hability on a claim Pursuant to 11 U.S.C. § 101(5), a “claim” includes a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated fixed, contingent, matured, jor] unmatured.” The district court ruled that because United filed for bankruptcy in December 2002 and its reorgani- zation plan was not confirmed until January 2006, United’s emergence from bankruptcy discharged any liability on claims that arose before its reorgani- zation. Because plaintiffs alleged that United made its last commission cut in March 2002, the district urt dismissed plaintiffs’ claims against Umited as scharged debt under 11 U.S.C. § 101(5) As a preliminary matter, plaintiffs’ brief does not hallenge the district court’s decision to dismiss United under 11 U.S.C. § 10115), other than to men- le sentence that “lelach of these airlines emerged from bankruptcy before Travel Agents filed their complaint.” Moreover, the record and_ the Amended Complaint refute this assertion. Because plaintiffs present only a perfunctory argument re- garding United’s dismissal under 11 U.S.C. § 101(5), plaintiffs have waived this argument. See United States v. Phinazee, 515 F.3d 511, 520 (6th Cir. 2008) (issues adverted to in a perfunctory manner, unac- companied by some effort at developed argumenta- tion, are deemed waived). In any event, we find no error in the district court’s ruling that United’s potential liability qualified as discharged debt under 11 U.S.C. § 101(12). 10a Plaintiffs assert that United is nonetheless liable under a continuing violation theory because United allegedly rejoined the conspiracy after emerging from bankruptcy in 2006. Specifically, plaintiffs contend that United’s decision to “continue” the “conspiracy commission rate” (which, at this point, was 0%) after its reorganization created a new § 1 claim under the Sherman Act. As a general rule, a successfully reorganized debtor under Chapter 11 of the Bankruptcy Code is liable for any independent conduct that arises after the confirmation of its bankruptcy plan. /n r WorldCom, Inc., 546 F.3d 211, 221 (2d Cir. 2008); O’Loghlin v. County of Orange, 229 F.3d 871, 875 (9th Cir. 2000). In short, the debtor gets a fresh start, but that “does not [provide] a continuing license to violate the law.” Jd. In the present case, the district court concluded that United's post-reorganization 0° com- mission policy did not create a new § 1 claim because its decision was “merely a reaffirmation of a previous act.” Plaintiffs rely on Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997), to argue that United’s conduct qual: fies as a continuing violation. The Alehr case, however. did not involve a formerly bankrupt corporation. /d at 186. Klehr simply reiterates that the antitrust laws recognize continuing violations and, more precisely, that a new § 1 claim arises each time a company sells a price-fixed product. Jd. at 188. lla We have held that an “antitrust cause of action accrues ... each time a defendant commits an act that injures the plaintiff’s business.” DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462, 467 (6th Cir. 1996) (citing Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338 (1971)). “[T]he focus is on the timing of the causes of injury, i.e., the defendant's overt acts, as opposed to the effects of the overt acts.” Peck v. Gen. Motors Corp., 894 F.2d 844, 849 (6th Cir. 1990) (per curiam) (emphasis added). “|T|he fact that |] injuries have a rippling effect into the future only establishes that [plaintiffs] might have been entitled to future damages... .” /d. Here, we reject plaintiffs’ attempt to characterize United’s decision to maintain its 0% commission policy as an overt act. “Since the Supreme Court decided Zenith, federal courts have uniformly defined a continuing antitrust violation as one in which the plaintiff’s interests are repeatedly invaded.” Peck, 894 F.2d at 849 (quoting Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 237 (9th Cir. 1987) (internal quotation marks and alterations omitted)). Although United’s participation in the alleged con- spiracy would certainly create a rippling effect, plain- tiffs assert that United's final act to effectuate that conspiracy occurred in 2002, long before United emerged from bankruptcy. We also cannot ignore the consequence of concluding that an overt act occurred under these facts. If we were to adopt plaintiffs’ continuing violation theory, the applicable limitations period for a § 1 claim would be infinite — an antitrust 12a plaintiff could routinely salvage an otherwise un- timely claim by asserting that it continues to lose revenue because of past alleged anticompetitive conduct. We therefore hold that the district court properly dismissed plaintiffs’ claims against United. IT] We review de novo the district court’s dismissal of plaintiffs’ Amended Complaint under FED. R. Civ. P. 12(b\6). Johnson v. City of Detroit, 446 F.3d 614, 618 (6th Cir. 2006). In Twombly, the Supreme Court held that a complaint alleging violations under § 1 of the Sherman Act cannot survive a motion to dismiss un- less it avers facts that raise a reasonable expectation that discovery will reveal evidence of an_ illegal agreement. Twombly, 550 U.S. at 556. In the wake of Twombly, allegations of parallel conduct and bare assertions of conspiracy no longer supply an adequate foundation to support a plausible § 1 claim. /d. Specifically, the complaint’s “|f Jactual allegations must be enough to raise a right to relief above the speculative level,” 1d. at 555, and “state a claim to relief that is plausible on its face.” Id. at 570. Of course, we must still “construe the complaint in the light most favorable to the plaintiff, accept its allega tions as true, and draw all reasonable inferences in favor of the plaintiff.” Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th Cir. 2008) (internal quotation and citation omitted). “Yet, to survive a motion to dis- miss, the complaint must contain either direct or l3a inferential allegations respecting all material elements tu sustain a recovery under some viable legal theory.” Eidson v. State of Tenn. Dep't of Children’s Servs., 510 F.3d 631, 634 (6th Cir. 2007). “We need not accept as true legal conclusions or unwarranted factual infer- ences,” Jones, 521 F.3d at 559 (alteration and internal citation omitted), and “[clonclusory allegations or legal conclusions masquerading as factual allegations will not suffice.” Eidson, 510 F.3d at 634 (internal citation omitted). A. Allegations of concerted action by competitors are frequently based on a pattern of uniform business conduct, which courts often refer to as “conscious parallelism.” Conscious parallelism, however, is not in itself prohibited under § 1 of the Sherman Act. As the Supreme Court explained in Twombly: Because § 1 of the Sherman Act “does not prohibit [all] unreasonable restraints of trade ... but only restraints effected by a contract, combination, or conspiracy,” Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775 (1984), “[t]he crucial question” is whether the challenged anticompetitive con- duct “stem|[s] from independent decision or from an agreement, tacit or express,” Theatre Enters. v. Paramount Film Dtstrib. Corp., 346 U.S. [537, 540 (1954)|. While a showing of parallel “business behavior is admissible circumstantial evidence from which the fact finder may infer agreement,” it falls short of l4a “conclusively establishling] agreement or .. . itself constitut{ing] a Sherman Act offense.” Id. at 540-41. Even “conscious parallelism,” a common reaction of “firms in a concentrated market [that] recogniz[e] their shared eco- nomic interests agd their interdependence with respect to price and output decisions” is “not itself unlawful.” Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 227 (1993). The inadequacy of showing parallel conduct or interdependence, without more, mirrors the ambiguity of the behavior: consistent with conspiracy, but just as much in line with a wide swath of rational and competi- tive business strategy unilaterally prompted by common perceptions of the market. Ac- cordingly, we have previously hedged against false inferences from identical behavior at a number of points in the trial sequence. An antitrust-conspiracy plaintiff with evidence showing nothing beyond parallel conduct is not entitled to a directed verdict, see Theatre Enters., supra; proof of a § 1 conspiracy must include evidence tending to exclude the pos- sibility of independent action, see Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (1984); and at the summary judgment stage a § 1 plaintiff’s offer of conspiracy evidence must tend to rule out the possibility that the defendants were acting independently, see Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). ld5a Twombly, 550 U.S. at 554 (some internal citations omitted). The Twombly decision provides an additional safeguard against the risk of “false inferences from identical behavior” at an earlier stage of the trial sequence — the pleading stage. A district court’s early assessment of the sufficiency of a §1 claim under Fep. R. Civ. P. 12(b)(6) or Fep. R. Civ. P. 12(c) ad- dresses the dilemma of the extensive litigation costs associated with prosecuting and defending antitrust lawsuits. As the Twombly Court acknowledged, “the costs of modern federal antitrust litigation and the increasing caseload of the federal courts counsel against sending the parties into discovery when there is no reasonable likelihood that the plaintiffs can construct a claim from the events related in the complaint.” /d. at 558 (internal citation and quotation marks omitted). In Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009), the Supreme Court explained the Twombly decision as follows: [In Twombly)|, we considered the sufficiency of a complaint alleging that incumbent tele- communications providers had entered an agreement not to compete and to forestall competitive entry, in violation of the Sher- man Act, 15 U.S.C. § 1. Recognizing that § 1 enjoins only anticompetitive conduct “effected by a contract, combination, or conspiracy,” Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752, 775 (1984), the plaintiffs in l6a Twombly flatly pleaded that the defendants “hald] entered into a contract, combination or conspiracy to prevent competitive entry _ and hald] agreed not to compete with one another.” 550 U.S. at 551 (internal quotation marks omitted). The complaint also alleged that the defendants’ “parallel course of con- duct ... to prevent competition” and inflate prices was indicative of the unlawful agreement alleged. Jbid. (internal quotation marks omitted). The Court held the plaintiffs’ complaint deficient under Rule 8. In doing so |,] it first noted that the plaintiffs’ assertion of an un- lawful agreement was a “‘legal conclusion’” and, as such, was not entitled to the assump- tion of truth. /d., at 555. Had the Court simply credited the allegation of a conspir- acy, the plaintiffs would have stated a claim for relief and heen entitled to proceed perforce. The Court next addressed the “nub” of the plaintiffs’ complaint — the well- pleaded, nonconclusory factual allegation of parallel behavior — to determine whether it gave rise to a “plausible suggestion of con- spiracy.” /d., at 565-566. Acknowledging that parallel conduct was consistent with an unlawful agreement, the Court nevertheless concluded that it did not plausibly suggest an wlicit accord because it was not only compati- ble with, but indeed was more likely explained by, lawful, unchoreographed free-market be- havior. Id. at 567. Because the well-pleaded fact of parallel conduct, accepted as true, did not plausibly suggest an unlawful agreement, Lva the Court held the plaintiffs’ complaint must be dismissed. /d.. at 570 Id. (emphasis added Plaintiffs first argue that Twombly is distin guishable because their Amended Complaint “makes independent allegations of actual agreement.” Plain- tiffs contend that {4 90, 91, and 121 independently allege an illegal agreement. In 4 121, plaintiffs use the word “agreement,” asserting that “the conduct of Defendants described hereinabove, and... the agree ment between and among Defendants to reduce, cap and eliminate commissions paid to plaintiffs” violates the Sherman Act. (Emphasis added.) This averment is nothing more than a legal conclusion “masquer ading” as a factual allegation. See Eidson, 510 F.3d at 634. The Supreme Court rejected a similar argument in Twombly, holding that “a few stray statements speakling] directly of agreement ... are merely legal conclusions resting on | | prior allegations.” Twombly, 550 U.S. at 564. 2aragraphs 90 and 91 of the Amended Complaint assert that defendants’ executives, who were “respon- sible for [] setting [] commission levels ... met frequently during the period of cuts and caps,” which “afforded these persons the opportunity to ... con- spire” and “communicate| |] with one another for the purpose of ... implementing ... their common plan....” These allegations, however, aver only an 18a opportunity to conspire, which does not necessarily support an inference of illegal agreement. In fact, {4 90 and 91 are located in a section of the Amended Complaint entitled “Opportunities for Defendants to Combine and Conspire.” We conclude that plaintiffs’ attempt to distinguish Jiwombly on the basis that plaintiffs allege “actual agreement” fails. i. Next, plaintiffs argue that the district court erred when it dismissed their §1 claim against Alaska, AAG, Horizon, and America West because the Amended Complaint contained more than bare asser tions of conspiracy and parallel conduct. We disagree In each of the four references to Alaska in the Amended Complaint, plaintiffs allege only that Alas- ka adopted uniform commission cuts in 1997, 1999, 2000, and 2001. The Amended Complaint does not contain any factual allegations to support Alaska’s involvement in the conspiracy, beyond its parallel behavior. America West is also referred to four times but, like Alaska, plaintiffs allege parallel conduct alone and fail to aver facts sufficient to implicate America West in any conspiracy. AAG and Horizon are also named defendants and parties to this appeal, but neither is mentioned in the body of the Amended Complaint, nor do plaintiffs specify how these defendants are involved in the alleged conspiracy. Consequently, if these “defen- dant[s] [sought] to respond to plaintiffs’ |] allegations . ~ - > . - - > e _ . - - - = a - - - _ + = n > . ~ - ij > [ ~ - —— = : » ~ — _~ + - + ~ — . - . — n ~ ~ \ . o — ¥ — — ~ ~ 2 ms —_ > - . . _ ~ — A - P - - - _ - ™ _ _ “ - . - - { ~ . e — > _— » - 7 = j ~ —_ - - _ = 2 - 4 ee _ wrt 8 am £ f+. fa i | 5 35% - ee = aa $ i4 - Po: | 30% in oe —-~{-4—| -+ Exclucing capital gans i off Be ty ae aoe ae -e~ Including capital gains ; | | 26% ---—' sae : ba wha ~ | ~ a] ~ ™N ~ ts] ~ ™ ~ “ ~ ~~ ~ Se t ~~ ~ ea) an ao eo on n a a oo mom on oO n a nan Q e- r ad err FF © c c + ad er Ft FF Ff FT SF FIGURE 1 The Top Decile Income Share, 1917-2007 Source: Table Al and Table A3, col. P90-100. Income is defined as market income (and excludes government transfers). Top decile includes all families with annual income above $109,630 in 2007. Forty years ago the average CEO made twenty times what the average worker did; now it is nearly 400 times. Thomas Piketty & Emmanuel Saez, Income Inequality in the United States: 1913-1998, 118 Q.J. Econ. 1 (2003), data updated through 2007 available at http://elsa.berkeley.edu/~saez/. From the time of Herodotus in 500 B.C. to the present, historians and political philosophers have believed that a high level of inequality of economic and political power undermines the basis of constitutiona’ democracy and stable government generally: “So the Athenians had increased in strength, which demonstrates that an equal voice in government has beneficial impact not merely in one way, but in every way.” THE LANDMARK HERODOTUS: THE HISTORIES 400 (Robert B. Strassler ed. 2007). “The constitutional essential here ir rather that below a certain level of material and social well-being, and of training and (Continued on following page) 42a There are many, including my colleagues, whose preference for an unregulated laissez faire market place is so strong that they would eliminate market regulation through private antitrust enforcement. Using the new Twombly pleading rule, it is possible to do away with price fixing cases based on reasonable inferences from strong circumstantial evidence. As in this case, the proponents of this strategy propose to require either an express written agreement among competitors or a transcribed oral agreement to fix prices. Nothing less will do. Insider testimony, a strong motivation to collude, and aggressive, lock- step unanimity by competitors in pricing become insufficient to state a case. Over time, the antitrust laws fall further into desuetude as the legal system and the market place are manipulated to benefit economic power, cartels, and oligopolies capable of setting prices. This case is just one small step in that direction. But this direction is unlikely to be changed unless the Supreme Court steps in to make it clear that 7wombly may not be used, as my colleagues propose, as a cover for repealing regulation of the marketplace through private antitrust enforcement. education, people simply cannot take part in society as citizens, much less equal citizens ... it is what is required to give due weight to the idea of society as a fair system of cooperation between free and equal citizens. ...” JOHN RAWLS, POLITICAL LIBERALISM 166 (1993). 43a UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT No. 07-4464 In re: TRAVEL AGENT COMMISSION ANTITRUST LITIGATION. TAM TRAVEL, INC., et al., Plaintiffs-Appellants, Vs DELTA AIRLINES, INC., et al., Defendants-Appellees. Before: MERRITT, BOGGS, and GRIFFIN, Circuit Judges JUDGMENT (Filed Oct. 2, 2009) On Appeal from the I'!»ited States District Court for the Nerther:z. wiccrict of Ohio at Cleveland. THIS CAUSE was heard on the record from the district court and was argued by counsel. IN CONSIDERATION WHEREOF, it is ORDERED that the judgment of the district court is AFFIRMED. ENTERED BY ORDER OF THE COURT /s/ Leonard Green Leonard Green Clerk 44a IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION IN RE: TRAVEL AGENT ) MDL Docket No. 1561 COMMISSION ANTI- ) N.D. Ohio Case TRUST LITIGATION ) No. 1:03 CV 30000 ) JUDGE ) PETER C. ECONOMUS This D , MEMORANDUM nyfesiiadaroniataas OPINION AND ORDER Relates To: ) ALL ACTIONS ) (Filed Oct. 29, 2007) This matter is before the Court upon Defendants’ Motions to Dismiss Plaintiff’s First Amended Com- plaint made pursuant to Rule 12(b)(6). Oral argu- ments were held on October 18, 2007. I. BACKGROUND The instant case is brought by travel agents who opted out of the plaintiff class in Hall v. United Air Lines, Inc., 296 F. Supp. 2d 652 (E.D.N.C. 2003).' The ’ The instant matter consists of two actions transferred to this court and coordinated for pretrial proceedings: (1) Tam Travel, Inc., et al. v. Delta Airlines, Inc., et al., filed in the U.S. District Court for the Northern District of California on April 9, 2003; and (2) Swope Travel Agency, Inc., et al. v. Orbitz, LLC, et al., filed in the U.S. District Court for the Eastern District of Texas on June 5, 2003. On November 10, 2003, the Judicial Panel on Multidistrict Litigation transferred Tam and Swope to this District pursuant to 28 U.S.C. § 1407 so that pretrial (Continucd on following page) 45a Court allowed Plaintiffs in the Jam Travel action to file an Amended Complaint on September 14, 2007, in light of the recent Supreme Court decision in Bedl Atlantic Corp. v. Twombly, 127 S. Ct. 1955 (2007). De- fendants, in turn, filed Motions to dismiss asserting that Plaintiffs cannot meet the new pleading stan- dard enunciated by the Court in Twombly. Defen- dants Alaska Airlines, Inc. (“Alaska”), Alaska Air Group, Inc. (“AGA”), Air Tran Airlines, Inc. (“ATA”), American Airlines, Inc. (“American”), America West Airlines, Inc. (“AWA”), Continental, Airlines Inc. (“Continental”), Delta Airlines, Inc. (“Delta”), Horizon Air Industries (“Horizon”), Frontier Airlines, Inc. (“Frontier”), KLM Royal Dutch Airlines (“KLM”), Northwest Airlines, Inc. (“Northwest”), and United Airlines, Inc. (“United”) filed the following eight Motions to Dismiss’: Motion to Dismiss First Amended Complaint filed by Northwest Airlines, Inc. (Dkt. #142) 12(b\(6) Motion to Dismiss Tam Travel Plain- tiffs’ First Amended Complaint Filed by 8 Moving Defendants (Dkt. #144) proceedings could be coordinated or consolidated with the case Fausky, et al. v. American Airlines, et al., filed in this Court on May 8, 2003. (Master Dkt. #1). The Fausky case has since been dismissed. (Fausky Dkt. #25). Tam and Swope, however, remain before the Court. * Plaintiffs dismissed U.S. Airways, Inc. and U.S. Airways Group on September 13, 2007 without prejudice. 46a Motion to Dismiss First Amended Complaint Filed by Delta Airlines, Inc. (Dkt. #145) Motion to Dismiss the First Amended Com- plaint filed by Frontier Airlines (Dkt. #146) Motion to Dismiss TAM Travel Plaintiffs’ First Amended Complaint filed by America West Airlines, Inc. (Dkt. #147) Motion to Dismiss First Amended Complaint Filed by Alaska Airlines (Dkt. #148) Motion to Dismiss the First Amended Com- plaint Filed by United Airlines, Inc. (Dkt. #150) Motion to Dismiss the First Amended Com- plaint Filed by ATA Airlines (Dkt. #166) Il. STANDARD OF REVIEW When presented with a motion to dismiss under Rule 12(b)\(6), a court evaluates whether a plaintiff’s complaint pleads a cognizable claim. Gentile v. Fifth Ave. Otolaryngology, Inc., 2006 WL 2505915 (N.D. Ohio Aug. 28, 2006). All allegations in the complaint must be taken as true and construed in a light most favorable to the nonmovant. Ang v. Proctor & Gamble Co., 932 F.2d 540, 544 (6th Cir. 1991). While the court * Although Defendant ATA filed its Motion to Dismiss on November 25, 2007, after the deadline, the Court will now consider ATA’s Motion because it raises the same issues as the other seven Motions to Dismiss. 47a must accept a plaintiff’s factual allegations as true, it “must not accept plaintiff’s legal conclusions or unwarranted factual inferences as true.” Gentile, 2006 WL 2505915, at *3 (citing Lewis v. ACB Bus. Servs., 135 F.3d 389, 405-06 (6th Cir. 1998)). A complaint alleging a conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C. §1, must set forth sufficient factual allegations “to raise a right to relief above the speculative level” and “to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965, 1974 (2007). To survive a motion to dismiss, the plaintiff must file “a complaint with enough factual matter (taken as true) to suggest that an agreement was made.” Jd. at 1965. Recently, the Supreme Court addressed the sufficiency of pleadings of a Section 1 Sherman Act claim under a Fed. R. Civ. P. 12(b)(6) standard, holding that “we do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Twombly, 127 S. Ct. at 1974. As such, the Court did not mandate a “heightened” pleading of specific facts, but instead held that the facts themselves must “raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” /d. at 1965. It is under the “plausibility standard” set out in Twombly that the Defendant airlines contend that the Plain- tiffs’ antitrust claims must be dismissed. In Twombly, the plaintiffs alleged that the defen- dants conspired to restrain trade by inflating charges _or local telephone and high-speed Internet services. A&a Id. at 1962. The plaintiffs contended that there was a lack of meaningful competition in their telephone and Internet markets because the defendants had en- gaged in parallel conduct to prevent competition. Jd. at 1962-63. The plaintiffs also stated that they had a “belief” that the defendants entered into a contract, combination or conspiracy to prevent competitive entry in their markets. /d. at 1963. In examining “what a plaintiff must plead in order to state a claim under § 1 of the Sherman Act,” the Court determined that stating such a claim requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made. “Asking for plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement.” /d. at 1965. The Court went on to hold that “an allegation of parallel conduct and a bare assertion of conspiracy will not suffice. Without more, parallel conduct does not suggest conspiracy ... when allegations of paralle] conduct are set out in order to make a §1 claim, they must be placed in a context that raises a suggestion of a preceeding agreement.” Id. at 1966. In applying the plausibility standard to the complaint, the Court concurred with the district court that the complaint failed because the plaintiffs based their claims on descriptions of parallel conduct, “and not on any independent allegation of actual ayree- ment among |the defendants].” Jd. at 1970. The Court 49a noted that the basis of the complaint concerned the alleged parallel conduct of the defendants to keep competitors out of their markets and implied that those actions demonstrated an illegal agreement on the part of the defendants. Jd. at 1970-71. The Court. therefore found that the supposed agreement between the defendants to disobey the 1996 Telecommuni- cations Act was more of a natural and “unilateral reaction” of each defendant to resist competition, and that such individual actions by the defendants did not “plausibly suggest” an agreement or conspiracy by the defendants. /d. at 1971. Lastly, the Court emphasized that “we do not require heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face,” stating that in a complaint a plaintiff must “nudge” its §1 claim “across the line from conceivable to plausible.” /d. at 1973. In the instant. case, Defendants request that in light of Theombly, the Court now determine [sic] whether Plaintiffs’ Amended Complaint should be dismissed for failure to state a claim under FRCP 12(b)\(6). lil. LAW AND ANALYSIS The Court’s construction of the Amended Com- plaint and Defendant’s Motions to Dismiss reveals four distinct arguments: (1) Plaintiffs have failed to demonstrate parallel conduct with respect to AWA, Alaska, AGA, Frontier, and Horizon; (2) Plaintiffs failed to allege any facts regarding KLM’s participation in 50a the alleged conspiracy; (3) Defendants Delta, United and Northwest's assertion that Plaintiff’s Amended Complaint should be dismissed because they have been discharged in bankruptcy; and (4) Plaintiffs have not plead sufficient facts that “plausibly sug- gest” an agreement or conspiracy. The Court will address each set of arguments in turn. A. AWA, Alaska, Frontier, and Horizon Defendants AWA, Alaska, Frontier, and Horizon‘ contend that Plaintiffs are unable to demonstrate that they acted in parallel to reduce and eliminate travel commissions between 1995 and 2002. As stated earlier, the Court made clear in Twombly, “when allegations of parallel conduct are set out in order to make a § 1 claim, they must be placed in a context that raises a suggestion of preceding agreement, not. merely parallel conduct that could just as well be independent action.” /d. While the larger airlines focus on the allegations necessary to suggest the re- quired context for a conspiracy claim (commonly re- ferred to as “plus factors”), Defendants AWA, Alaska, * Plaintiff also names Alaska Air Group (“AGA”), a holding company, as a Defendant. AGA is mentioned by name only once in the Amended Complaint. As a holding company, Defendant AGA points out, it did not pay commissions to travel agents. (Dkt. #148). Therefore, Plaintiffs claims against AGA must be dismissed because there is no factual matter to plausibly sug- gest that AGA joined or participated in an unlawful conspiracy. Twombly 127 S. Ct. at 1956. 5la Frontier, and Horizon assert that Plaintiffs have failed to demonstrate parallel conduct because AWA, Alaska, Frontier, and Horizon did not have the same role in the reduction of travel agent commissions. Plaintiffs allege that Defendants conspired to cap or cut the travel agent commissions on six separate occasions: 1995, 1997, 1998, 1999, 2001, and 2002. 1. 1995 In the Amended Complaint, Plaintiffs allege that in 1995, Delta, American, Northwest, United and Continental imposed a cap of $25 for one-way domestic tickets and $50 for round-trip domestic tickets. (Amend. Compl. 4 31). Plaintiffs do allege, however, that AWA, Alaska, Frontier, and Horizon imposed caps at this time. 2. 1997 Between September 18 and 25, 1997, United, American, Delta, Northwest, Continental, U.S. Air- ways, the airlines reduced commissions from 10 to 8 percent. (Amend. Compl. 9 34, 41). AWA reduced commissions a few days later, on September 29th and Alaska followed suit on September 30th. (Amend. Compl. 440). Frontier, however, did not reduce commissions until March 2008. (Amend. Compl. q 41). 5a Between November 12 and December 2, 1998, United, American, Delta, Northwest, Continental and U.S. Airways imposed a cap on commissions on international tickets. (Amend. Compl. 4 43-39). The Amended Complaint does not allege that AWA, Alaska, Frontier, and Horizon implement such a cap on international commissions at this time. 4. 1999 On October 7, 1999, United reduced commissions again from 8 to 5 percent. (Amend. Compl. { 51). American instituted the same reduction on October 8, with Delta and Northwest following on October 11. (Amend. Compl. 452-54). Continental and U.S. Airways then reduced commissions to 5 percent on October 12. (Amend. Compl. 4 55-56). AWA and Alaska followed suit on October 18, and Frontier implement [sic] the reduction on November 2. (Amend. Compl. 4 57-59). 5. 2001 On August 18, 2001, American capped commis- sions payable to travel agents on domestic flights at $10 and $20 for one-way and round-trip flights, respectively. (Amend. Compl. 461). On August 22, United and Delta implemented an identical cap, and Northwest and U.S. Airways followed suit the next day. (Amend. Compl. 4 64, 66). Contientnal [sic] and AWA announced their intention to implement the cap. 53a (Amend. Compl. 4 65, 67). Frontier and Alaska did not follow until September 4 and November 1, re- spectively. submit [sic] evidence that they did not impose the commission cap until nearly three weeks later. (Amend. Compl. 7 68, 69). 6. 2002 On March 14, 2002, Delta announced their in- tention to eliminate the travel agents’ commissions completely. (Amend. Compl. 471). On March 18, American and Continental did the same. (Amend. Compl. 9 72, 75). Northwest followed the next day, and United eliminated the commissions on March 20. (Amend. Compl. { 73, 74). On March 21, U.S. Airways and AWA followed suit. (Amend. Compl. 4 76, 77). On May 31, 2002, Frontier and Alaska also eliminated commissions completely. (Amend. Compl. { 78, 79). The above named airlines allege that on the six occasions they either: (1) did not follow the commis- sion moves of their larger competitors at all; (2) when they did implement caps or cuts similar te those implemented by larger airlines, they followed the commission moves only after periods ranging from several weeks to six months; or (3) only implemented the caps or cuts partially. “One does not need an agreement to bring about this kind of follow-the-leader effect in a concentrated industry.” Reserve Supply Corp. v. Qwens Corning Fiberglas Corp., 971 F.8d 37, 53 (7th Cir. 1992); United States v. Intl Harvester Co., 274 U.S. 693, 54a 708-709 (1927) (“The fact that competitors may see proper, in the exercise of their own judgment, to follow the prices of another [firm] does not establish any suppression of competition or show any sinister domination.”). Plaintiffs have not put forth any “factual matter” suggesting that AWA, Alaska, Frontier, and Horizon engaged in parallel conduct because. according to the Amended Complaint, the four airlines either failed to implement the caps entirely or implemented the caps after the larger airlines. Twombly, 127 S. Ct. at 1965 (“stating a claim requires a complaint with enough factual matter (taken as true) to suggest agreement was made.”). Absent such evidence, Plaintiffs claims against AWA, Alaska, Frontier, and Horizon must fail. B. KLM KLM asserts that Plaintiffs’ Amended Complaint fails to allege that KLM ‘“reduceld], cap[ped) and eliminate[d] commissions paid to travel agencies and travel agents” at any time. (Amend. Compl. 4j 32). As KLM points out, the Amended Complaint does not allege any specific action taken by KLM. (Dkt. #1 144). The only appearance of KLM in the Amended Complaint, other than its identification as a Defen- dant, is the allegation t’ .t KLM was represented at three trade association meetings. (Amend. Compl. 4 97, 98, 101). Because Plaintiffs failed to allege that KLM engaged in parallel conduct, the claims against KLM must also be dismissed. C. Bankruptcy Northwest, United, and Delta allege that Plain- tiffs’ Amended Complaint must be dismissed because it asserts a claim that has been discharged by the bankruptcy court. Delta, Northwest, and United point out that their reorganization plans were confirmed in 2007, 2005 and 2006, respectively. (Dkt. #143, 145, 150).” The commission reductions alleged by Plain- tiffs, however, occurred between 1995 and March 2002. Therefore, Defendants assert that Plaintiffs’ claims must be dismissed because they accrued in 2002, prior to Defendants’ discharge in bankruptcy. 1. Public Records Normally, when conducting a review of a 12(b)(6) motion to dismiss, the Court cannot consider facts outside the pleadings. In the instant case, Defendants attached to their Motions to Dismiss, copies of orders * Northwest, United and Delta each petitioned for Chapter 11 bankruptcy and had their reorgnization [sic] plan approved by the bankruptcy court. On December 9, 2002, United petitioned for Chapter 11 bankruptcy. On January 20, 2006, the bankruptcy court confirmed United’s reorganization plan, which became effective February 1, 2006. (Dkt. #150). On September 14, 2005, Delta filed a petition for bankruptcy in United States Bankruptcy Court for the Southern District of New York. On April 25, 2007, the Bankruptcy Court entered an order confirming the reorganization plan, effective April 30, 2007. (Dkt. #145). On September 25, 2005, Northwest filed a Notice of Bankruptcy and the instant case was stayed against Northwest pursuant to section 362 of the Bankruptcy Code, 11 U.S.C. § 362(a\1). 56a surrounding Defendants bankruptcy petitions. These orders are public records from United States Bank- ruptcy Courts and, therefore, possess the requisite level of reliability. Although the Court “must only take judicial notice of facts which are not subject to reasonable dispute,” Plaintiffs refer to the bankruptcy proceedings in the Amended Complaint. Passa v. City of Columbus, 123 Fed. Appx. 694, 697 (6th Cir. 2005). As a result, consideration of the attachments does not require conversion of the motion into one for sum- mary judgment under Rule 56. Wyser-Pratte, 413 F.3d at 560; see also Palay v. United States, 349 F.3d 418, 425 n.5 (7th Cir. 2003) (a district court is entitled to take judicial notice of matters in the public record). Therefore, the Court may review the public records relied upon by Defendants. 2. Continuing Antitrust Violation Plaintiffs argue that even though Defendants were discharged in bankruptcy after the 2002 com- mission reduction, the alleged conspiracy to eliminate the travel agents’ commissions was a “continuing con- spiracy” because the airlines “continued to abide bye [sic] the conspiracy” after the commissions were capped in 2002. (Dkt. #152). “In the context of a continuing conspiracy to violate the antitrust laws,” a cause of action accrucs “each time a plaintiff is injured by an act of the defendants.” Zenith Radio Corp. v. Hazeltine Re- search, Inc., 401 U.S. 321, 338 (1971). “Thus, ‘even 57a when a plaintiff alleges a continuing violation, an overt act by the defendant is required to restart the statute of limitations and the statute runs from the last overt act.’” Peck v. General Motors Corp., 894 F.2d 844, 849 (6th Cir. 1990) (quoting Pace Indus., Inc. v. Three Phoenix Co., 813 F.2d 234, 237 (9th Cir. 1987)). For purposes of claim accrual, the fact that an antitrust plaintiff may suffer continuing damages from an on-going conspiracy is irrelevant. In the antitrust context, “the focus is on the timing of the causes of injury, i.e., the defendant’s overt acts, as opposed to the effects of the overt acts.” Id. Accord- ingly, accrual of an antitrust claim depends on the commission of an “injurious act” rather than “the abatable but unabated inertial consequences” of that act. Barnosky Oils, Inc. v. Union Oil Co. of California, 665 F.2d 74, 81 (6th Cir. 1981) (quoting Poster Ex- change, Inc. v. National Screen Service Corp., 517 F.2d 117, 128 (5th Cir. 1975)). Although continuing damages may of course be recovered, “if a plaintiff feels the adverse impact of an antitrust conspiracy on a particular date, a cause of action immediatcly accrues to him to recover all damages incurred by that date and all provable damages that will flow in the future from the acts of the conspirators on that date.” Zenith, 401 U.S. at 339. Plaintiffs’ Amended Complaint alleges that after the three airlines emerged from bankruptcy, they “had knowledge” of the alleged conspiracy, “ratified” the alleged conspiracy by failing to change its 58a policies, and has “never taken any action to disavow” the alleged conspiracy. (Amend. Compl. { 116-118). To give rise to a new cause of action, “an overt act must have two elements: 1) It must be a new and inde- pendent act that is not merely a reaffirmation of a previous act; and 2) it must inflict new and accumu- lating injury on the plaintiff.” Martinez v. Western Ohio Health Care Corp., 872 F. Supp. 469, 472 (S.D. Ohio 1994); see also Grand Rapids Plastics, Inc. v. Lakian, 188 F.3d 401, 406 (6th Cir. 1999); DXS, Inc. v. Siemens Med. Sys., Inc. 100 F.3d 462, 467-68 (6th Cir. 1996); Pace, 813 F.2d at 238 (9th Cir. 1987). Thus, even if the airlines continued to participate in the conspiracy alleged by plaintiffs after having emerged from bankruptcy, that fact alone would not give rise to a new antitrust claim. See, e.g., Varner v. Peterson Farms, 371 F.3d 1011, 1019 (8th Cir. 2004) (where allegedly anticompetitive conduct was pursuant to previously agreed-upon contract, conduct did not give rise to antitrust claim, which had already accrued when contract was signed); Kaw Valley Elec. Coop. Co. v. Kan. Elec. Power Coop., Inc., 872 F.2d 931, 933 (10th Cir. 1989) (continued conduct based on previ- ously taken final decision does not create new anti- trust claim); Garelick v. Goerlich’s, Inc., 323 F.2d 854, 856 (6th Cir. 1963) (continuation of previously initi- ated conduct does not give rise to a new antitrust claim); Martinez, 872 F.Supp. at 472 (antitrust defendant’s continued adherence to a prior, allegedly unlawful decision, did not give rise to a new claim because the plaintiffs “continue to suffer the same 59a injury that was previously inflicted upon them, albeit in an ever increasing amount”). Plaintiffs allege that Delta, Northwest, and United “conformed” their “commission levels and caps” to those of the co-conspirators when it exited from Chapter 11. (Amend. Compl. 4 118). But that post-Chapter 11 “conformance” consisted solely of the airlines continuing the same commission policies that it had followed for years, both before and during its Chapter 11 proceeding. Therefore, Plaintiffs are un- able to demonstrate an overt act other than the alleged commission reduction in 2002. 3. Pre-petition Debt The formerly bankrupt Defendants assert that because Plaintiff’s claim accrued in 2002, it is a pre- petition debt that cannot be brought against them. The Bankruptcy Code clearly provides that the con- firmation of a reorganization plan discharges “any debt” owed by the debtor as of the date of confirma- tion, unless such plan provides otherwise. 11 U.S.C. § 1141(d)(1) (“Except as otherwise provided .. . in the plan, ... the confirmation of a plan . . . discharges the debtor from any debt that arose before the date of such confirmation ... whether or not . . . the holder of such claim has accepted the plan... .”). Delta, Northwest, and United’s alleged liability to Plaintiffs constitutes a “debt” within the meaning of the Bankruptcy Code. The term “debt” is defined to mean “liability on a claim.” 11 U.S.C. §101(12). The 60a term “claim” is, in turn, broadly defined to mean a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undis- puted, legal, equitable, secured, or unsecured.” 11 U.S.C. § 101(5). As the Supreme Court has noted, “Congress intended by this language to adopt the broadest available definition of ‘claim.’” Johnson uv. Home State Bank, 501 U.S. 78, 83 (1991); see also In re Jensen, 995 F.2d 925, 930 (9th Cir. 1993). Congress adopted an all-encompassing definition of “claim” so that “all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case.” H.R. REP. NO. 95-595, at 309 (1977). Accordingly, Plaintiffs’ antitrust claims “con- stitute bankruptcy ‘claims’ within the meaning” of the Bankruptcy Code. /n re Penn Central Transp. Co., 771 F.2d 762, 766 (3d Cir. 1985). The court-approved bankruptcy plans for Delta, United, and Northwest specifically provide that all pre-petition claims against the respective airlines were discharged. (Dkt. #150, Ex. A to Ex. 1, discharg- ing against United, “Claims and Causes of Action of any nature whatsoever, ... whether known or un- known, against ... the Debtors ... , including with- out limitation ... Causes of Action that arose before the Confirmation Date”); (Dkt. #143, the Northwest plan provides that “all holders of claims ... along with their respective present or former employees, agents, officers, directors or principals, shall be enjoined from taking any action to interfere with the 6la implementation or consummation of the Plan.); (Dkt. #145, See id. 4 78 (Delta’s plan provides that, “upon the Effective Date, all existing claims against the Debtors and Interests in the Debtors shall] be, and shall be deemed to be, discharged and terminated, and all hoiders of Claims and Interests shall be precluded and enjoined from asserting against the Reorganized Debtors.”) Because the three airlines were discharged in bankruptcy proceedings, Plaintiffs are permanently enjoined from pursuing their antitrust claim against Delta, Northwest, and United. By statute, the dis- charge of a debt “operates as an injunction against the commencement or continuation of an action to collect [or] recover ... any such debt.” 11 U.S.C. § 524(a\(2). D. Joint Motion to Dismiss Plaintiffs attempt to meet the Twombly standard against the remaining Defendant airlines — Conti- nental and United — by pointing to five separate facts that suggest a conspiracy: (1) averments of parallel conduct; (2) opportunity to conspire; (3) evidence that the actions were against Defendants’ self-interest; (4) evidence that information regarding the reduction of travel agent commissions was common knowledge; and (4) industry practice. 62a 1. Gunn Deposition Before proceeding to the legal analysis, it is necessary to address whether the deposition of Amer- ican’s executive Michael W. Gunn (“Gunn”) is properly before the Court. Plaintiff’s Amended Complaint re- fers to portions of Gunn’s testimony. (Amend. Compl. 4 87). Defendants respond in their Motions to Dismiss, by referring to additional portions of Gunn’s testimony that were not included in the Amended Complaint. (Dkt. #144). As discussed with respect to the bankruptcy Defendants, Rule 12(b) of the Federal Rules of Civil Procedure provides that if “matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.” Under certain circumstances, however, a document that is not formally incorporated by reference or attached to a complaint may still be considered part of the pleadings. See 11 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE § 56.30/14} (3d ed. 1998). This occurs when “a docu- ment is referred to in the complaint and is central to the plaintiff’s claim....” Jd. In such event, “the defendant may submit an authentic copy to the court to be considered on a motion to dismiss, and the court’s consideration of the document does not require conversion of the motion to one for summary judgment.” /d.; see, e.g., Weiner v. Klais & Co., 108 63a F.3d 86, 89 (6th Cir. 1997) (considering pension plan documents that defendant attached to the motion to dismiss part of the pleadings because the documents were referred to in the complaint and were central to plaintiff's claim for benefits under the plan). In the present case, the portions of Gunn’s deposition referred to in the Amended Co [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_1760%3A1. Public record. Not legal advice.